DNS firm files antitrust lawsuit against GoDaddy
Firm alleges that GoDaddy is unfairly blocking it from automating clients’ DNS change requests.
A firm that helps domain owners update DNS records has filed an antitrust lawsuit against GoDaddy (NYSE: GDDY).
Entri acts as a conduit between SaaS firms and domain registrars. If a client needs to update their domain’s DNS records to work with an email provider, site builder, or other SaaS business, they can use a wizard directly on the SaaS firm’s website to make these changes.
This avoids the confusing process of logging into a domain registrar and making manual DNS changes, such as adding TXT and CNAME records.
DNS changes are a problem that has plagued both domain registrars and SaaS firms for years. Both deal with client support requests from confused clients.
Citing this problem, GoDaddy created Domain Connect as an open standard published under the MIT license in 2016.
Entri was founded as an alternative solution to facilitate SaaS firms’ integrations with domain registrars for DNS changes.
The firm cites drawbacks to Domain Connect as reasons why firms would pay for Entri’s service. In addition to reduced technical implementation work, Entri states that Domain Connect only works with four domain registrars. Entri’s solution works with 40, meaning that more SaaS firms’ clients can configure their domains through its solution than through Domain Connect.
As stated by Entri’s lawsuit (pdf), it initially offered its clients the ability to make changes on domains at GoDaddy through Entri’s custom solution. The lawsuit states that, at GoDaddy’s request, it began using the Domain Connect protocol for GoDaddy connections beginning in April 2022 and signed an agreement:
“Pursuant to that Agreement, when a fresh SaaS firm wished to use Entri Connect, Entri sent to GoDaddy a “template,” consistent with the Domain Connect protocol, that set forth the required DNS settings for that SaaS firm’s application. GoDaddy would then onboard that template, which would allow Entri Connect to work as intended with GoDaddy-registered domains.”
There were many requests for these templates. The lawsuit states that by July 2023, the firms had a shared Slack channel where Entri would make template requests.
But then Entri received disturbing news.
In August 2023, a GoDaddy employee informed Entri via Slack: “[a]ll Domain Connect [sic] asks are right now on hold. Resources are at a premium and the DNS team is extremely busy. You may post your requests in here, but we will not act on them at this time.”
Entri alleges that GoDaddy then asked it to pay a licensing fee to use Domain Connect. Despite Entri believing it had an agreement in principle, the parties were never able to finalize a contract.
The lawsuit alleges that in December 2023, GoDaddy instituted a fresh policy stating that clients could not use Entri to change their DNS. It also informed some of Entri’s SaaS clients that they could no longer use Entri to change their clients’ DNS records.
The lawsuit quotes one unnamed Entri client’s recollection of its conversation with GoDaddy:
Transparently, [GoDaddy] had like kind of like scare tactic meeting where they got [] aggressive with us… The tone of the meeting was so negative that it like left us scarred… it was just like so unpersonable [sic] and so mean, to the point where we were like, we didn’t do anything, um so anyways, we just wanted to circle back with you all. I don’t know if you’re hearing this from others. I’m imagining you are, based on the tone of their conversation, it clearly sounds like they’re trying to monetize something that they haven’t monetized ahead of, and they’re trying to claw back as much of the [] revenue as they can, but [] we’ve enjoyed working with you all, and we really like your product, so, like, we’re hoping to continue to use it, but also, in the middle of our day to day, kind of being pulled aside and being scolded, we’re a little bit taken aback.
Entri’s clients began complaining to the firm, citing that a sizable percentage of their clients use GoDaddy. Entri’s service could no longer work for these clients, significantly reducing its value.
This is where antitrust laws come into play, as stated by Entri:
Entri’s experience with its clients demonstrates that GoDaddy has the unique ability to force SaaS firms and their end users to behave in ways that are inconsistent with how they would ordinarily act in a free market. Entri’s clients and prospects have expressly told Entri as much.
Entri further wrote:
Entri is not suggesting—and has never suggested—that GoDaddy is obligated to work with Entri. From 2021 to April 2022, Entri supported users with DNS records at GoDaddy-registered domains using its own systems and processes for configuring DNS records. From April 2022 to January 2024, it used Domain Connect, in accordance with GoDaddy’s preferences. Either is acceptable. But what GoDaddy cannot lawfully do is threaten Entri’s clients or attempt to restrict Entri from assisting end users in setting up their stated DNS configuration preferences
Interestingly, as stated by the lawsuit, GoDaddy is now asking firms that use Domain Connect to make changes on domains registered at GoDaddy to pay a fee.
GoDaddy stated it does not comment on pending litigation.
