But the single most aggressive bidder for lucrative new Web domains is a little-known investment group with an intriguing name: Donuts Inc. Its $57 million play for 307 new domains — more than Google, Amazon and Allstate combined — has prompted alarm among industry groups and Internet watchdogs.
Donuts Inc.’s major play for new Web domain names raises fears of fraud
They warn that Donuts has close ties to a company with a well-documented history of providing services to spammers and other perpetrators of Internet abuses. Should Donuts come to control hundreds of new domains, including “.doctor,” “.financial” and “.school,” consumers could see a spike in online misbehavior, these critics warn.
“If the allegations concerning Donuts turn out to be true, these 300 top-level domains could be the Wild West for fraud and abuse,” said David E. Weslow, a D.C.-based lawyer who represents several major corporations.
Law enforcement authorities in several nations have warned for years that rapid expansion of new domains could unleash a fresh wave of online crimes while making it harder to identify the culprits. The number of what are called “top-level domains” is set to expand from the current 22, including “.com” and “.org,” to potentially more than 1,400 next year.
Dismissing the concerns raised by industry groups, Donuts officials say they are well qualified to run the new domains responsibly.
“We and our very smart investors would not have spent almost $57 million if we had any concerns that we were not eligible,” said Jonathon Nevett, a Rockville-based lawyer who is one of four co-founders of Donuts.
Federal officials declined to comment on particular applicants, but they have repeatedly urged more rigorous background checks and a more gradual expansion of Internet domains. They worry that a solicitation for medical products from a Web site ending with “.health,” for example, might convey an air of authenticity no matter who the actual sender.
“I equate it with an apartment building, and the landlord lets drug dealers and rapists move in,” said FBI Supervisory Special Agent Bobby Flaim, who has tracked plans to create new Web domains for several years. “They’re paying the rent, so where’s the problem?”
Yet the power of U.S. officials, or that of any government, is limited.
Overseeing the issuing of Web addresses is a Los Angeles-based nonprofit group — the Internet Corporation for Assigned Names and Numbers, or ICANN — whose sharply growing revenue is tied to the continued expansion of domains. Its revenue grew from $5.7 million in 2002 to $68 million last year, according to federal tax documents.
ICANN officials say that safeguards will prevent companies with a history of abuse from gaining control of new domains and that consumers will benefit from the greater range of choices in Web addresses. But they acknowledged uncertainty about whether such rules would block the applications by Donuts.