The public dispute between hedge fund manager Bill Ackman and business magnate Carl Icahn over allegations made about Herbalife now includes a domain name twist, as reported by Bloomberg.
In December, Ackman made statements that the nutrition company is running a pyramid scheme and using price inflations and misleading sales figures to hide it, which he explains in detail on a website he created, FactsAboutHerbalife.com. At an investor meeting, Herbalife vehemently denied the allegations and accused Ackman of "mischaracterizing" its business. Icahn came to Herbalife's defense as well, sparring with Ackman on CNBC, and fellow hedge fund manager Daniel Loeb defended the company as well.
Herbalife also registered at least 10 domain names containing Bill Ackman's name, including TheRealBillAckman.com and BillAckman.net. The websites currently do not resolve, and it is not known whether or not the company has plans to host any content on them.
Now, someone has registered TheRealCarlIcahn.com and TheRealDanielLoeb.com. Again, the sites do not resolve, and registration information is hidden, but it would appear to another layer to the very public sparring match.
The domain name news does not appear to have had much of an effect on Herbalife's shares, as they have been on the rebound since Ackman's accusations first emerged, but there are unanswered questions about what the domain names will be used for. It remains to be seen whether or not any of the domain names will host content, but we will keep our eyes on them and update this post with any developments.
The Progress and Freedom Foundation recently published a paper titled “New gTLDs: Let the Gaming Begin” that described the numerous efforts of different organizations to preempt the gTLD application process by registering gTLD strings as trademarks with patent offices both here in the U.S. and abroad. The paper calls on ICANN to slow down and analyze such actions that clearly provide a short-term financial benefit for the applicants at the expense of trademark holders and registrants.
These subversive actions qualify as gTLD front running. Some of you may have heard the term “domain name front running” before. It refers to the act of using some form of insider information about an Internet user's preference for registering a domain name to preemptively register that domain name. The “insider information” is gathered by monitoring the attempts of an Internet user to check the availability of a domain name. The term first arose in connection with allegations that ICANN-accredited registrars were using insider information to register domain names in advance of the general public and then using them as PPC sites or reselling them at a higher value. Similarly, gTLD front running refers to the attempt to gain a leg up on the competition by securing the control of a gTLD before others are able to. In this case, groups are trying to circumvent the ICANN process by registering gTLD strings as trademarks in an effort to establish their “rights” to those gTLDs.
Because there is so much more at stake with gTLDs than single domain names, both monetarily and operationally, gTLD front running has even greater consequences for the domain name space than domain name front running. Interestingly enough, last week ICANN released the results of a study it had commissioned to assess how often domain name front running occurs. The study examined 600 domains over a ten-month period and found no evidence of front running.
I have to wonder why ICANN would devote its resources to commissioning this study when it has already published papers on domain name front running in 2007 and 2008 and a more complex issue with a greater impact on Internet users has emerged. Back in June, I blogged about how ICANN’s somewhat limited WHOIS study, while well-intentioned, came too late in the game to provide a meaningful answer to the problem in question. ICANN needs to address the issue of gTLD front running before it too becomes too big to handle.