Internet registrar VeriSign (Nasdaq: VRSN) has come up with a clever moneymaking scheme based on users' mistakes that has caused an uproar and spawned a lawsuit.
Before this week, mistyping or misspelling a Web address would likely direct you to a "404" error page, indicating the domain name did not exist. Now, however, VeriSign directs this typo traffic to a Web page of its own, called Site Finder. There, users might get help finding their lost site, but they'll also be subjected to advertising.
VeriSign has been entrusted by the U.S. Department of Commerce with overseeing all .com and .net registrations, and its latest actions have drawn accusations that it's abusing its monopolistic power. Major portal operators such as Microsoft (Nasdaq: MSFT) (irony noted), AOL (NYSE: AOL), and Yahoo! (Nasdaq: YHOO), for example, will likely lose significant search traffic to VeriSign's site.
This also means more spam in your inbox. Most Internet service providers (ISPs) can filter out email that is sent with false return addresses. Now, however, email that once showed invalid addresses will seem fine to the filters. The nonprofit Internet Software Consortium is already offering a patch to member ISPs that will counteract VeriSign's actions.
Yesterday, Popular Enterprises, the parent company of search engine Netster.com, filed a $100 million lawsuit against VeriSign. The suit alleges antitrust violations, unfair competition, and violations of the Deceptive and Unfair Trade Practices Act. "Imagine the uproar," says Popular Enterprises chief William Marquez, "if the Dept. of Transportation suddenly decided to direct all the traffic off the Interstates only to exits with D.O.T. sponsored hotels and restaurants."
VeriSign has remained rather quiet, saying it's only providing a much-needed service that helps Web surfers rather than directing them to a dead-end 404 page.
With an estimated 20 million misspellings each day, there's a lot at stake here. We're more inclined to agree with Carnegie Mellon University professor David Farber, who told The New York Times, "This is not any old company, but one that has been given a privileged position, although they are not behaving that way. I think what they've done is hijacking."
Looking at it another way, this is akin to a football team developing strategies to better compete against its opponents, and then having the referee change the rules in the middle of the game (and placing himself in first place in the NFC East).
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