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U.S. Probes NSI Over Web Address List

May 05, 1999| From Washington Post

WASHINGTON — The Justice Department is investigating whether Network Solutions Inc. of Herndon, Va., is violating antitrust laws by claiming sole ownership of a list of customer names and electronic addresses that it generated under an exclusive government contract to assign most Internet addresses, sources familiar with the matter said Tuesday.

Several NSI rivals argue that the customer database is central to their ability to compete against the firm, which until recently was the only company allowed by the U.S. government to assign addresses that end in ".com," ".net" and ".org."

The competitors, now preparing to issue their first Internet addresses, have asserted that the database functions as a sort of telephone book, providing a crucial way for them to contact and pitch their offerings to companies that hold Internet addresses.

The Commerce Department, which has been negotiating with NSI over the rules that govern the entry of competitors into the market, has argued in private meetings with the company that the database should be made more broadly available because it was created while NSI had a government-approved monopoly.

Although NSI allows people to look up the person or business that registered a particular address, through a service called "WhoIs," it does not provide that information in bulk form. The company also does not publicly release a list of the 4 million Internet addresses it has assigned.

NSI argues that it has an exclusive right to the database because the company's original agreement with the National Science Foundation specified that it would own any "intellectual property" created by the address-registration business. "It's very clear that we have the rights to this data," said NSI spokesman Christopher Clough.

NSI also contends that broadly releasing the database would create privacy concerns and could lead to an increase in unscrupulous Internet merchants sending out millions of unsolicited e-mail messages.

The Justice Department began an antitrust investigation into NSI in the summer of 1997, when the firm still had the exclusive contract with the NSF. That investigation became dormant, the sources said, after the contract ended in October 1998 and the Commerce Department, which assumed responsibility for Internet address management issues, said it would open the market to competition.

The Justice investigation, however, has become more active in recent weeks as the controversy over the database heated up, the sources said. The department recently asked NSI to provide additional documents about its business activities, the sources said. Clough confirmed there have been "recent communications" over "data issues" between the U.S. and NSI.

"This is the same [subpoena] from 1997 and they're looking at additional information relative to our business," he said.

A Justice Department spokeswoman would not comment other than to say the department is "looking at the possibility of anti-competitive practices in the Internet address registration industry."

Of particular interest to Justice and Commerce is NSI's recent announcement that it plans to use the database to build a vast directory of businesses on the Internet. Called the Dot Com Directory, it will allow people to search for companies by name, place of business and type of business.

That move concerns regulators because, until recently, NSI offered some of the address data in bulk. Among the users were business-information giant Dun & Bradstreet Corp. and a small Maryland firm called iAtlas Corp., the sources said. Now the firms must make individual queries to NSI's World Wide Web site, a process they contend hinders their ability to compete against NSI.

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