GoDaddy (NYSE: GDDY) has been unsuccessful in its efforts to dismiss a portion of a lawsuit brought against it by Entri, a company that serves as an intermediary between SaaS providers and domain registrars.
Entri facilitates the process for customers needing to update their domain’s DNS records to integrate with various email providers, site builders, or other SaaS applications. Customers can conveniently make these changes through a wizard available on the SaaS company’s website.
Previously, Entri collaborated with GoDaddy to implement this solution for domains registered with the company. However, GoDaddy later severed this relationship, compelling users to rely solely on its own Domain Connect service. Entri subsequently filed suit against GoDaddy on multiple antitrust grounds.
In response, GoDaddy requested the dismissal of three specific counts in the lawsuit: Count I, which alleges violations of Section 1 of the Sherman Antitrust Act; Count V, which addresses Tortious Interference with Contract; and Count VI, which concerns Tortious Interference with Business Expectancy.
Judge Anthony Trenga ruled against GoDaddy’s motion to dismiss all three counts, stating:
“GoDaddy’s changed terms of use require its users of its domain registration services (tying product) to forgo the use of any third-party aggregator services (tied product). This restriction is a negative tying agreement, both by its very definition and when examined through the lens of the antitrust policy concerns and objectives that underlie why tying agreements are prohibited under antitrust law.”
The judge further explained that GoDaddy’s policy effectively eliminates all aggregator services, including Entri Connect, from competing in the DNS records configuration market. Users are left with only two options: utilizing GoDaddy’s Domain Connect protocol or manually updating their DNS records. He emphasized that this limitation on consumer choice represents the type of anticompetitive harm that the Sherman Act is designed to prevent.
Additionally, Judge Trenga highlighted that while a company is entitled to establish the terms under which its customers may use its products or services, it cannot alter these terms in a manner that infringes upon antitrust laws.
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