Google scuppers Team Internet acquisition after profit warning

A Norwegian private equity company has dropped its plans to acquire Team Internet after Google changed the way it handles advertising on parked domains, a key source of revenue for the company.

Oslo-based Verdane had a deadline of today to announce a formal offer for the company, but instead said it “does not intend to make an offer” because “there has been a material change of circumstances”.

While Verdane did not elaborate, there was a simultaneous announcement from Team Internet that Google’s recently announced changes to AdSense for Domains present a “challenge” that will harm its business faster than it can adapt.

Google said last week that as of March 19 it will start opting its advertisers out of AFD, the service domainers and registrars use to monetize many parked domain names. Advertisers will be able to opt back in, but are not expected to do so en masse.

Team Internet’s Search reporting unit made $72 million of its $91 million net revenue from AFD last year, which it expects to decline following the changes.

The company said it plans to instead monetize its domains using Google’s newer Related Search On Content product, which shows Google search results including paid results on the publishers’ own sites, based on the content of the page.

That presumably means Team Internet is going to have to populate its domains with spammy, low-quality and presumably AI-generated content, in order to trigger the RSOC contextual algorithm. Thanks, Google!

“The market development has been long-anticipated, though the announced acceleration is a challenge,” Team Internet told investors.

“It is anticipated that, during this transition period, contributions from AFD will decline faster than contributions from RSOC appreciate, meaning that the financial performance of Team Internet’s Search segment will see a trough in 2025 before it recovers from 2026 onwards and returns to the long-term pattern,” it added.

It expects adjusted EBITDA to more than halve for the year in its Search segment, from $57 million last year to between $20 million and $25 million this year. The company said its domains business, which includes its registry and registrars, should be unaffected.

But that domains business seems to be still up for sale. Team Internet said it has received “repeated approaches” for the domains unit and is carrying out a “comprehensive review of its asset ownership”.

CentralNic spends $6.5 million on traffic network

CentralNic this morning said it has paid $6.5 million to acquire “a publishing network of revenue generating websites”.

The company, which is seeing an increasingly large chunk of its revenue coming from domain monetization, said the network generates $2 million in annual revenue and $1.5 million in earnings.

The seller is White & Case, a 120-year-old international law firm, not exactly the kind of company you’d expect to own a bunch of random monetized domains.

Neither the size of the network nor the means of monetization were disclosed.

CentralNic said the network was already a customer for roughly half of its sites, so the acquisition will add about $1 million to revenue and $1.5 million to earnings, reducing annual cost of revenue by about $500,000.

While the company is best know for selling domain names, following recent acquisitions revenue from its fast-growing “online marketing” segment outpaced its traditional revenue sources, bringing in $96.4 million in the first half compared to $78.3 million in it two domain-related segments.

Facebook gunning for Web.com in latest $27 million-plus cybersquatting lawsuit

Facebook has sued what it believes is a Web.com subsidiary, claiming the company has been engaged in wholesale cybersquatting for well over a decade.

The complaint, filed in a Pennsylvania District Court, alleges that New Venture Services Corp current owns 74 domains, and has previously owned 204 more, that infringe its Facebook, Instagram and WhatsApp trademarks.

While no other named defendants are listed, the complaint makes it abundantly clear that it believes NVSC is a subsidiary of Web.com and a sister of Network Solutions, Register.com, SnapNames and Perfect Privacy.

Facebook is suing partly under the Anti-Cybersquatting Consumer Protection Act, allowing it to claim $100,000 damages per infringing domain, so we’re looking at a floor of $27.8 million of potential damages should the lawsuit be successful.

But it’s also looking for NVSC to hand over any profits it’s made from the domains in question, which are generally parked with ads and listed for sale via the SnapNames network for premium fees.

While NVSC is registered in the British Virgin Islands and uses a Pennsylvania post office box as its mailing address, there’s a wealth of evidence going back to 2007 that it’s been affiliated first with NetSol and then Web.com.

Web.com’s last regulatory filing before it went private in 2017 lists NVSC as a subsidiary, which is probably the most compelling piece of evidence establishing ownership.

It appears that NVSC is a shell company that Web.com uses to hold potentially valuable or traffic-rich domains that its customers have allowed to expire. The names are then parked and put up for resale.

Example domains listed in the complaint include httpinstagram.com, faceebbok.com, facebooc.net, instagram-login.com, and installwhatsapps.com.

One would have to assume these names were captured using a fully automated process; even a cursory human review would clock that they’re useful only to bad actors.

The lawsuit is the latest in Facebook’s crusade against mainstream registrars it believes are profiting by infringing its trademarks, which has already ensnared Namecheap a year ago and OnlineNIC in October 2019.

Namecheap recently filed a counterclaim in which it tries to get some of Facebook’s trademarks cancelled.

Facebook has all but admitted that putting legal pressure on registrars is part of its strategy when it comes to getting the policies it wants out of ICANN on privacy and Whois access, where there’s currently an impasse.

Here’s the complaint (pdf).

Key-Systems adds parking API to RRPproxy

Top-ten registrar KeyDrive has delivered on a major piece of integration work following the merger of Key-Systems and NameDrive last year.
Key-Systems today announced that its RRPproxy reseller platform now has API commands that enable its resellers — and in turn their registrants — to easily park domains with NameDrive.
The new commands allow entire domain portfolios to be parked in bulk, according to the company.
Key-Systems and NameDrive formed KeyDrive in July 2011. The company also acquired Moniker and SnapNames earlier this year.

Could vertical integration kill registrar parking?

Will ICANN’s decision to allow registrars and registries to own each other help reduce the practice of registrars parking unused or expiring domain names?
A reading of the new top-level domain Applicant Guidebook in light of the recent “vertical integration” ruling it incorporates certainly raises this kind of question.
The AGB includes a policy called the Trademark Post-Delegation Dispute Resolution Procedure, or PDDRP, which allows trademark owners to seek remedies against cybersquatting registries.
The policy is quite clear that registries cannot be held accountable for cybersquatting by third parties in their TLD, unless they have, for example, actively encouraged the squatters.
But another example of infringement is given thus:

where a registry operator has a pattern or practice of acting as the registrant or beneficial user of infringing registrations, to monetize and profit in bad faith.

Now, this wouldn’t be a cause for concern in the current vertically separated market.
Most registries are only generally able to register domain names in their own TLD by going through an accredited registrar. Proving bad faith intent in that situation would be trivial.
But what of an integrated registry/registrar that also automatically parks recently registered or expiring domains in order to profit from pay-per-click advertising?
This is common practice nowadays. It’s been used to prove a registrant’s bad faith during many recent UDRP proceedings and one registrar is even being sued by Verizon for doing it.
Would a registrar parking an expired, trademark-infringing domain constitute it acting as a “beneficial user” of the domain “to monetize and profit in bad faith”?
Text added to the PDDRP section of the AGB in its most recent revision strongly suggests that “the registrar did it” would not be a defence for a vertically integrated company:

For purposes of these standards, “registry operator” shall include entities directly or indirectly controlling, controlled by or under common control with a registry operator

The PDDRP allows complainants to seek remedies such as injunctions, as well as the suspension of new registrations in a TLD and, exceptionally, the full revocation of their registry contract.
With that in mind, would an integrated registry/registrar want to risk any practice that puts their TLD at risk?