If you are into domain business or read any publication / blog that covers domaining industry then you are probably aware of how some registrars twisted the rules to get more domains than they would have officially.

Bob Parsons, GoDaddy CEO, was perhaps the first one to be vocal about this manipulation and wrote a pretty in-depth blog post about how it happened.

Quoting Mr. Parsons about how Company “X� and others hijacked the system.

During the landrush process, legitimate registrars like GoDaddy.com and others get one request for a .EU name – every time the selection process passes through the list of registrars.

Company “X� and others might get to make one hundred or more requests – they get to make a request for every phantom registrar they were able to get accredited by the EURid registry. This increases considerably the likelihood that these companies will get the names that they are after. Legitimate registrars get one request. They might get one hundred or more.

Let’s go back to my earlier example where I showed how the landrush process worked. Now let’s factor in the the phantom registrars that Company “X” and others have injected into the process. My guess is, if there are 1,100 registrars, that about 600 of them are phantoms, created solely to game the system. Not all of these are created by Company “X,” a number of companies and groups are participating in this ploy.

If I represent groups of legitimate registrars by the letters A through E, and those gaming the system by “X” the landrush process would look like this: “X, X, X, X, X, X, A, B, C, D, E.” So you see, most of the names in the .EU landrush are falling into the hands of those gaming the systems.

However, EURid — the governing body of .eu domains seems to be in crisis-management mode and has tried to cleanup the mess it created by suspending 74 000 .eu domain names on the basis of breach of contract.

They made a press release –

EURid, the non profit organisation operating the Internet top level domain .eu, has suspended 74 000 .eu domain names and has sued 400 registrars for breach of contract. This move was prompted by abusive behavior from a syndicate of registrars who have systematically acquired domain names with the obvious intent of selling them. In the domain name business this is called warehousing and is not permitted.

“In this case we are convinced that the domain name holders of the 74 000 .eu names (Ovidio Ltd, Fausto Ltd and Gabino Ltd) are acting as a front for a number of registrars. The domain name holders and the registrars can be regarded as one and the same. Since registrars should only register domain names for existing customers and not “warehouse� the names in order to resell them at a higher price, this is clearly in breach of the registrar contract,� says Herman Sobrie, Legal Manager of EURid.

Within the limits of the EC regulations (733/2002 & 874/2004,) EURid strives to maintain .eu as an attractive top level domain for Europeans who want to convey a European Identity on the Internet. When the system is abused there is a risk that the perceived value of .eu will decrease, not only for the almost two million legitimate holders of .eu domain names but also for all fair registrars. That is why EURid wants to act firmly against any improper behavior regarding .eu domain names.

As means of quality control, EURid constantly monitors the registrations of .eu domain names in order to make sure all holders of .eu domain names are based in the EU zone, as required by to the Public Policy Rules for .eu. Similarly, EURid verifies that all accredited registrars are acting in the best interest of the end user in accordance with their contract with EURid.

A handful of .eu domain names have already been suspended as their holders have not been able to show that they are based within the EU.

The outcome of the suspended domain names now awaits a court decision. EURid would later like to make the names available for registration again.

However, domaining is a huge-huge business! I doubt the big players will let it go so easily. If nothing else, they can always play the “end-user-interest” card.