Does Google Want Akamai Dead?

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For years, bears have assumed that at some point, Google (Nasdaq: GOOG  ) would use its worldwide network to disrupt Akamai Technologies (Nasdaq: AKAM  ) . That day may have finally arrived.

According to Ars Technica, a group led by Google and several Akamai competitors has devised a new extension to the domain name server, or DNS, protocol. In effect, it would allow any server fielding routing requests to more accurately pinpoint a geographic destination before delivery, thereby eliminating the need for Akamai's algorithmic magic.

The idea is creepy in a way. Proponents are seeking to add users' IP addresses -- the multi-digit numbers that determine the name and location of a computer -- to web requests. Think of the customer service agent who asks for your phone number in "order to serve you better."

To be fair, it's not clear that this sort of inside-out routing would outperform a content delivery network, or CDN, like Akamai's, since both approaches seek to reduce the distance that data must travel to reach users. Yet just having this capability widely available could give customers leverage in negotiating usage agreements, crimping profits among the major CDN operators.

Akamai could take the biggest hit, but it's possible that the new system might also hurt beleaguered Limelight Networks (Nasdaq: LLNW  ) and Level 3 Communications (Nasdaq: LVLT  ) . None of these top CDN providers is participating in the DNS makeover as of this writing.

What's your take? Do you believe the addition of smarter routing to the DNS protocol will make a difference? Weigh in using the comments box below. You can also keep tabs on the CDN market by adding these stocks to your watchlist:

The Motley Fool owns shares of Google. Motley Fool newsletter services have recommended buying shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Akamai and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

Read/Post Comments (5) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 01, 2011, at 3:18 PM, 354JQ wrote:

    I'm curious whether the DNS will still have to travel over the fiber backbones of companies like Level 3? If not, what sort of network will the DNS be using?

  • Report this Comment On September 02, 2011, at 7:33 AM, Rikaelus wrote:

    Though I work in the CDN industry I wouldn't claim to be an expert on delivery methods; my experience and responsibilities lie in more general business areas. And quite frankly maybe I don't understand this subject matter enough to comprehend what's being changed about DNS, but...

    The company I work for already uses DNS trickery so that content is delivered from a location as close to the end-user as possible. A geographically distributed content delivery network would seem pointless without the ability to effectively deliver content from the nearest location.

    I guess I don't understand what this DNS change will add, except perhaps a bit more accuracy. But a bit more accuracy doesn't sound very threatening...

  • Report this Comment On September 02, 2011, at 12:39 PM, AllisonOpenDNS wrote:

    As someone who's familiar with this topic, I can say all companies involved, including mine, OpenDNS, would love to have Akamai participate. The technology is open and based on an IETF draft that's publicly available. It's not an effort by any one organization to edge out competitors, but rather a collaboration by many organizations. Our hope is that Akamai, Level3, Limelight and other CDNs will all elect to participate so that more Internet users can reap the benefit of a faster Internet. For those who are interested, more information is here:

  • Report this Comment On September 02, 2011, at 1:35 PM, Rikaelus wrote:

    Since it concerns the article at hand I'll ask it here (in response to AllisonOpenDNS)--how does the result provided by GIS differ from using Anycast routing methodologies that have been in practice for years?

    Having read some of the links she provided, it again looks like its reinventing the wheel. Perhaps it's a wheel that will be more easily accessible for companies lacking the resources or knowledge to build out a proper Anycast DNS network, but I'm not yet seeing incentive for The Akamais and the Limelights who have achieved similar for over a decade.

  • Report this Comment On September 15, 2011, at 11:12 AM, richday wrote:

    I think this really misses the point of how this proposed system works, and who can use it. It is in no way a replacement to the algorithms in use by Akamai or anyone else for that matter, but rather just a different value used as the input to them. Some background and other thoughts on the topic…

    Rich Day

    Highwinds Chief Customer Advocate

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