In April, GoDaddy purchased one of the largest domain name registrars in the world, Neustar.
Neustar sells domains for a variety of registries such as Donuts (.Ventures and .News), Google (.New and .App), and Verisign (.com and .net). It operates domain name extensions like .Biz, .NYC, and .US. And Neustar also offers back-end management services for many other domain extensions.
Before the sale, GoDaddy was exclusively involved in selling domain names and was not at all involved in the management of domain name registries.
This deal will mark the first time GoDaddy will own registry or domain name wholesaler. Now GoDaddy will be involved in the wholesale side as the owner of a registry, and the retail side as a domain name registrar.
Because GoDaddy will act as both the wholesaler and retailer for some domains it may have a competitive advantage. This potential unfair advantage puts GoDaddy in a position to offer special discounts or more exposure for its own extensions. This may cause some other registrars to express concerns about competition.
To avoid the appearance of conflict GoDaddy has said that it: “will strictly adhere to a governance model that maintains independence between the GoDaddy registry and registrar business”.
This includes:
- Not sharing information or data that gives away competitive information between GoDaddy’s registry and registrar.
- No preference will be given to the GoDaddy registrar and special offers will be unilaterally applied.
- The registrar and the registry business performance will be handled separately.
- Compliance will be insured by legal and audits within GoDaddy.
Paul Bindle, the VP of Domains at the GoDaddy Registry stated:
“As a registrar, giving preferential treatment to [GoDaddy Registry] TLDs doesn’t make sense. The objective is to make sure our customers find the perfect domain. We want to get the right domain into our customers’ hands.”
GoDaddy has demonstrated its ability to successfully manage conflicts of interest in the past when it purchased Afternic in 2013. Initially, investors were concerned that commissions might increase. But Afternic commissions have actually decreased.
It’s likely that consumers will actually benefit from the deal.
Neustar was granted permission to raise prices on the .biz TLD last year by ICANN.
However, Nicolai Bezsonoff, who will run the GoDaddy Registry, stated that “We will not be raising prices, full stop” and that they would in fact try to lower prices for some of their TLDs.
Bezsonoff further stated that “GoDaddy and the entire domain name industry will lose if consumers feel that domains are becoming too expensive or aren’t available”.
The purchase was announced just one day after the Columbian government gave Neustar a five-year extension to operate the .co TLD. The announcement of the sale was postponed until the Columbian government’s announcement as GoDaddy didn’t want to be perceived as influencing the contract process.
The purchase price was revealed today as $218 million when GoDaddy announced its first-quarter earnings.
GoDaddy is not acquiring Neustar’s DNS or DDoS businesses.
