Investors selling Akamai Technologies (Nasdaq: AKAM) are making a mistake.

As I write this, shares of the company behind the web's leading content delivery network (CDN) are down more than 2% for the week. Here's why:

  • Level 3 Communications (Nasdaq: LVLT) today confirmed earlier reports that it would take over from Akamai some of Netflix's (Nasdaq: NFLX) streaming business. Limelight Networks (Nasdaq: LLNW) is also expected to realize some benefit from the shift.
  • Yesterday, Akamai filed suit against smaller rival Cotendo for what it says are violations of three of its key patents for delivering services over the web. Cotendo is a key rival that aims to take away some of Akamai's higher-margin value-added services business, such as accelerated delivery of cloud-computing data. AT&T (NYSE: T) and Google (Nasdaq: GOOG) are two of the start-up's high-profile partners.

Perceptually, these developments are important. They indicate that Akamai's competitive advantage is under assault. (If it weren't, why sue Cotendo?)

But let's also be real about the money at stake here. Video remains a massive growth market, and Akamai will continue to deliver video for Netflix. Whatever revenue it loses to Level 3 and Limelight -- if any -- will likely be minimal in the larger scheme of the $1 billion empire it's creating.

If you want to worry about something, worry about the Cotendo suit. Value-added services such as e-commerce and web application acceleration (i.e., delivery of cloud-computing data) now comprise more than 50% of Akamai's annual revenue. To ensure future growth, Akamai must stake an unassailable claim on this area of the market. Cotendo and its partners are challenging that claim.

I'll have more on the details of the suit in the coming days. In the meantime, let us know what you think of these developments. Are you tempted to sell Akamai? Or do you see the sell-off as a buying opportunity? Please vote in the poll below, and then leave a comment to explain your thinking.

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Akamai and Google are Motley Fool Rule Breakers recommendations. Google is also a Motley Fool Inside Value pick. Netflix is a Motley Fool Stock Advisor selection. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the 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 Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. 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 owns shares of Google and is also on Twitter as @TheMotleyFool. Its disclosure policy is a little too raspy to sing in the rain today.