GoDaddy.com Goes on the Auction Block

The Wall Street Journal

GoDaddy.com, the closely held website that registers Internet domain names, has put itself up for sale in an auction that could fetch more than $1 billion, people familiar with the matter said.

Qatalyst Partners, the boutique firm run by veteran technology banker Frank Quattrone, has been hired to shop the Go Daddy Group Inc., which runs the world's largest domain name registrar, these people said. Private-equity firms are expected to bid for the company, which currently has more than 43 million domains under management.

GoDaddy.com and Qatalyst representatives did not immediately respond to requests for comment.

Based in Scottsdale, Ariz., GoDaddy.com is owned by Bob Parsons, who founded the company in 1997 and is its chief executive—a man the company website describes as "not shy to speak his mind." The company is well known for its edgy advertising, including Super Bowl commercials and ads featuring different "Go Daddy Girls," including racing car driver Danica Patrick.

In addition to registering domain names, GoDaddy.com sells e-commerce, security and other services to people and businesses looking to manage their online presence. The company posted revenue between $750 million and $800 million in 2009, according to people familiar with the matter.

Two smaller competitors, Register.com and Network Solutions, have both been in private-equity's hands. Earlier this year, technology-focused buyout firm Vector Capital sold Register.com to another web registration and design provider , Web.com Inc., for $135 million. Network Solutions is owned by General Atlantic Partners.

Private-equity firms are attracted to the business because of the steady cash flow from monthly fee-based subscriptions and the potential for "up-selling" customers additional features to enhance their websites.

Network Solutions, GoDaddy, Cease Registering New Web Sites in China

The Washington Post

Two major Internet domain name registration companies have ceased registering Web sites in China in response to intrusive new government rules that require applicants to provide extensive personal data, including photographs of themselves. 

GoDaddy.com, the world's largest domain name registration company, and Network Solutions, based in Herndon, objected to policies that were imposed by China in December. 

The rules, Go Daddy said, are an effort by China to increase monitoring and surveillance of Web site content and could put individuals who register their sites with the firm at risk. The company also said the rules will have a "chilling effect" on new domain name registrations. 

The decisions come amid a showdown between China and Google, which recently announced it will no longer censor search results on its site in the country. Analysts and human rights advocates have warned that China's insistence on censorship and control over information is becoming a serious barrier to trade. 

Go Daddy announced its decision at a congressional hearing on Wednesday. 

"Go Daddy and Google deserve more than praise for doing the right thing in China -- they deserve our government's support," said Rep. Christopher H. Smith (R-N.J.), who has sponsored a bill that would prevent U.S. companies from sharing personal user information with "Internet-restricting" countries. 

In December, China began to enforce a new policy that required any registrant of a new .cn domain name to provide a color, head-and-shoulders photograph and other business identification, including a Chinese business registration number and physical, signed registration forms. That data was to be forwarded to the China Internet Network Information Center (CNNIC), a quasi-governmental agency. Most domain name registries require only a name, address, telephone number and e-mail address. 

"We were immediately concerned about the motives behind the increased level of registrant verification being required," Christine N. Jones, general counsel of the Go Daddy Group, told the Congressional-Executive Commission on China. "The intent of the procedures appeared, to us, to be based on a desire by the Chinese authorities to exercise increased control over the subject matter of domain name registrations by Chinese nationals." 

Go Daddy has been registering domain names since 2000 and has more than 40 million domain names under management. 

Jones said China was the first government to retroactively seek additional verification and documentation of registrants. 

Jones also said Go Daddy customers with Chinese domain names have recently been attacked more frequently than in the past. The sites targeted tend to be those "deemed not appropriate" by Beijing -- sites that contain content about the Tiananmen Square uprising or human rights, for instance. 

"When our sites get shut down in China, we are never told why . . . and it's impossible to know why," Jones said. 

The Chinese Embassy in Washington did not respond to a request for comment. 

Network Solutions said it stopped taking new accounts in China last December, according to spokeswoman Susan Wade. 

"Of course the decision affects our businesses, but it also didn't make business sense to operate under their change of procedures," she said. 

Arvind Ganesan, business and human rights director at Human Rights Watch, said China's new rules are yet another example of the country tightening its censorship policies and undermining the ability of U.S. companies to operate freely. 

"The underlying intent is if you're engaging in political speech, we want to know who's engaging in it and what Web site is behind it," Ganesan said. "This is a way the Chinese government can send a chilling message to people that they shouldn't speak freely online. It's forcing us companies to be both the censor and the spy on behalf of the Chinese government." 

Jones said Go Daddy's decision to stop registering new domains was unrelated to Google's recent decision. 

"With all due respect, this has nothing to do with Google," she said. She added that the company had been deliberating what it would do about its business in China before Google's announcement. 

"We decided we didn't want to be agents of China," she said. 

At Wednesday's hearing, Alan Davidson, Google's director of public policy, said governments worldwide should develop new rules to combat unfair trade barriers online and should make Internet freedom part of the criteria for receiving development aid. He noted that the number of governments that routinely censor the Internet has grown from a handful in 2002 to more than 40 today. 

Google Calls for Action on Web Limits

NY Times

A top Google executive on Wednesday called for new rules to put pressure on governments that filter the Internet, saying the practice was hindering international trade.

Alan Davidson, director of United States public policy for Google, told a joint Congressional panel that the United States should consider witholding development aid for countries that restrict certain Web sites. He said censorship had become more than a human rights issue and was hurting profit for foreign companies that rely on the Internet to reach customers.

“The growing problem for Internet censorship is not isolated to one country or one region,” Mr. Davidson told the Congressional-Executive Commission on China. “No single company and no single industry can tackle Internet censorship on its own.”

The fallout from China’s restrictive Internet policies widened on Wednesday when officials from Go Daddy Group, an Internet services company, told the commission that the company would halt registration of Chinese domain names.

Christine Jones, executive vice president of Go Daddy, said the company was concerned about privacy after Chinese officials requested photo identification and signatures of its customers. For the first time, she said, Go Daddy had been asked to retroactively obtain documentation for individuals who had registered a domain name.

“We’re concerned about the chilling effect,” Ms. Jones said. “We made the decision that we didn’t want to act as an agent of the Chinese government.”

Ms. Jones described a chaotic scene for Internet companies in China. She said attacks from hackers were rampant, fraudulent payments were common, and spammers worked without fear of punishment from the government.

Representative David Wu, Democrat of Oregon, said he thought more companies would follow the example of Go Daddy and Google and cut back operations in China.

“Pretty soon you have a cascade going,” Mr. Wu said. “There is a difference between compliance and complicity.”

More than 40 countries actively censor the Internet currently, Mr. Davidson said, and 25 governments block Google. Mr. Davidson suggested asking countries to pledge to keep sites unfiltered in international trade agreements.

On Monday, Google closed its Internet search service in China and began directing users in that country to its uncensored search engine in Hong Kong. So far, Mr. Davidson said, the company had noticed “intermittent” censorship of the Hong Kong site. Despite the restrictions, the company plans to maintain a sales team in mainland China, he said.

Google’s decision to leave China was prompted in part by a series of attacks by hackers last year, which raised broader concerns about the flow of information in the country. The Chinese government has disputed that it was the source of the attacks, which focused on e-mail accounts of human rights advocates.

Mr. Davidson said Google would consider returning to the Chinese market if the government there removed its restrictions. But he acknowledged that there would likely be a “hard road ahead” since neither side is willing to cede ground.

“It’s going to take a lot of work to combat that censorship,” he said.

In a statement to the commission, Chinese officials defended their policies, saying, “foreign companies need to abide by Chinese laws and regulations when they operate in China.”

“The Chinese government encourages the development and popularization of the Internet and is committed to the opening up of the Internet,” the statement said.

The panel included members of the Senate, House and Obama administration officials. It was chaired by Senator Byron L. Dorgan, Democrat of North Dakota, and Representative Sander M. Levin, Democrat of Michigan.

“Information is not to be feared, and ideas are not enemies to be crushed,” Mr. Dorgan said in opening remarks. “The truth is China too often wants a one-way relationship with the world.”