Google Partners Question Firm’s Domain Parking Decision

Google’s Adsense for Domains partners question Google’s moves.

In business lingo it’s called a channel conflict.

Imagine times were still good in auto sales and you wanted to start a Cadillac dealership. You paid Cadillac a hefty franchise fee, spent a number of million dollars building a showroom, and then bought a couple hundred cars as inventory.

Then one day Cadillac contacted you and stated, “Thanks for all of your help. We’ve decided we’ll begin selling cars directly to the public, too. You’ll have to compete with us.”

Most contracts forbid these types of channel conflicts. And they certainly tread on ethical lines.

So it was rather surprising when the prior week Google disclosed it was creating a channel conflict with domain parking firms by offering domain parking directly to domain owners, which are right now clients of these parking firms.

Over the past a number of days I’ve had conversations with numerous Google (NASDAQ: GOOG) partners and sources close to Google Adsense for Domains to discuss the Google move. What I’ve heard is disturbing.

First, Google’s partners were mostly given a day or two of notice that this fundamental change would be made. Although that may be shocking, one partner quipped “that’s more notice than we would have received a year ago.”

Second, Google has been asking its partners for more client data over the past year. It asked for account level information and stated it was for purposes of controlling fraud. When parking firms were hesitant to hand over the data, Google assured them it had no interest in offering domain parking directly to domain owners, the partners told me.

With this in mind, some domain parking firms are wondering if Google has been reducing click revenue in the parking channel over the past couple months to artificially inflate its own results when it introduced the system. It may seem far-fetched, but when a firm tells you it won’t compete directly and then does an regarding face, it’s natural to question its actions.

Some parking firms are looking at the situation as a glass half full. They say Google’s move legitimizes the domain parking channel. One firm pointed out that domainers will finally realize that some of the things they blame parking firms for aren’t their fault following all.

I suspect there’s another side to the story. Maybe Google wasn’t happy with how parking firms were performing. But Google spokesperson Daniel Rubin would not respond to any specific questions from Reglike, only commenting “We think this will raise awareness of the space and benefit users, advertisers, and all domain owners.” (Note the clear omission from the list of those that will benefit.)

If what the partners are saying is true, you have to question Google’s “Do No Evil” motto. The firm seems to be adopting business practices that landed Microsoft in hot water.