Without typo-squatters, how far would Google fall?
The riches of cartooonnetwork.com
How much money is Google making from the world's typo-squatters? God only knows. Or rather: God, Eric Schmidt, Sergey Brin, Larry Page, and a few Oompah Loompahs inside their Mountain View Chocolate Factory.
According to a recent study from McAfee and Harvard prof/cyber watchdog Ben Edelman - which relies on web data from May 2008 - at least 80,000 domains are typo-squatting on America's 2,000 most popular web sites, just waiting for innocent web users to misspell or mistype their next url. And 80 per cent of those typo-squatting domains are funded through Google AdSense.
For instance, the study (PDF) says, 742 domains sit just a few misplaced characters from freecreditreport.com, and 327 are shadowing cartoonnetwork.com. "Cartoon Network with three Os. Cartoon Network with two Ts. Cartoon Network that starts with a k. More ways to misspell Cartoon Network than you ever imagined," Edelman tells The Reg. "And almost all of them serve Google ads."
In the US, typo-squatting is against the law. The 1999 Anti-Cybersquatting Consumer Protection Act (ACPA) prohibits anyone from "registering or using" domains misleadingly similar to a trademark or famous name. Yet Google is making money from typo-squatters - most likely a great deal of money. The trouble - as usual - is that there's no window into Google's black box of an ad platform. At least not yet.
Edelman is among the team of lawyers that filed a class action suit against Google in June 2007, accusing the ad broker of violating the ACPA, and he's confident that as part of the suit's discovery process, Google will have no choice but to reveal how much it's pulling in from typo-squatters.
In October 2007, Dell brought suit against 16 so-called domain parkers, claiming they were squatting on its trademarks, and a court freeze order indicated those 16 outfits were raking in as much $2m a month from Google ads - after Google took its cut.
Under the freeze, Google was ordered to shuttle a portion of the defendants' ad revenue into an account for safe keeping. Each month, the order said, the first million should go into the frozen account and the second million should go to the defendants. If revenues top $2m, the order said, half of what's left should be frozen too.
But that's just 16 companies. And who knows how high those revenues really went.
For the sake of argument, Edelman guesses that Google is making at least $2m each year from typo-squatting domains. According to his logic, domain parkers - outfits that only serve ads from their domains - only register sites that actually make money. Thanks to a loophole in ICANN's registration rules, you can "taste" a domain's traffic before you actually pay for it.
"We know [parkers] use tasting to predict which sites are going to be profitable," he says. "So, when a domain parker registers a site, we have a strong expectation that they're making money on that site."
Guessing that parkers are paying seven dollars a year for each domain, he figures they're making at least seven from Google. And if they're making seven, he says, Google's charging ten. "If Google is charging advertisers 10 dollars for 200,000 domains - an exceptionally conservative number - that would be $2m a year gross to Google. But that's a ridiculous estimate. 10 dollars is way too low, and 200,000 domains is way too low."
For its latest fiscal quarter, Google reported revenues of $5.54bn and profits of $1.35bn. But the company isn't about to admit how much of that comes from its "AdSense for Domains" program, which specifically enables parked domains - sites that do nothing but serve ads.
Google says it "takes trademark violations very seriously." When we asked about the Dell case back in February, Mountain View told us: "Our trademark policy specifically prohibits the use of trademarked terms. When we find or are made aware of trademark violations we take immediate action including removing ads from our system and sites from the AdSense network."
But Edleman - and that class action suit - argues that even if with such a policy in place, Google is violating the ACPA. The ACPA prevents 'use' of typo-squatting domains, he says, and Google is 'using' them. "Compared to other online scams, it's easier for a judge to get to the bottom of this problem, because Congress has acted. Congress has put in place a regulatory framework that said 'don't cybersquat on other people's trademarks.' We seek to hold Google to that framework."
The law firm defending Google did not respond to request for comment. And when we asked the company about the case, a spokesman said "We believe that these claims are entirely without basis, and we are vigorously defending ourselves."
But whether Google has run afoul of the law or not, it's certainly enabling outfits that do. Judging from Edelman's study, Google could end 80 per cent of all typo-squatting if it would simply ban domain parkers from AdSense.
But Google says that parked domains are wonderfully useful. "AdSense for domains allows domain name registrars and large domain name holders to provide valuable and relevant content on their parked pages," the company says. "Parked domain pages generally have no content; however, by adding targeted ads, we hope to help users find what they are looking for."
Surely, they also hope to make more money. "Google is very diligent about some kinds of scams, namely the ones that Google decides are against its corporate interest," Edelman says. "Then there are other kinds of scams that seem to offer a benefit to Google. They're scams against someone but not against Google. On this kind of scam, I'm seeing a pattern where Google is considerably slower to take the action I would hope to see.
"Google could do more [to stop typo-squatting] if they wanted to. But they profit from each and every click that's associated with these practices, so they have every incentive to look the other way." ®