Judge denies GoDaddy’s motion to dismiss in antitrust lawsuit

GoDaddy dealt a blow in antitrust lawsuit.

GoDaddy (NYSE: GDDY) has failed in its attempt to get part of a lawsuit filed by Entri dismissed.

Entri acts as a conduit between SaaS companies and domain registrars. If a customer 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 company’s website to make these changes.

The company previously worked with GoDaddy to enable its solution to work for domains registered at GoDaddy, but GoDaddy later cut it off, forcing people to use the registrar’s own Domain Connect service instead. Entri sued on a number of antitrust grounds.

GoDaddy asked a judge to dismiss three of the counts: Count I (violations of Section 1 of the Sherman Antitrust Act), Count V (Tortious Interference with Contract), and Count VI (Tortious Interference with Business Expectancy).

Judge Anthony Trenga denied (pdf) the motion to dismiss on all three counts. He wrote:

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). [Doc. No. 23] ¶¶ 100-01, 119, 131-133. 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…

…GoDaddy’s negative tie cuts off all aggregator services, including Entri Connect, from competing in the DNS records configuration market. Instead, the only option is choosing between GoDaddy’s Domain Connect protocol or requiring users to manually update their DNS records. This deprivation of choice is precisely the kind of anticompetitive harm that the Sherman Act forbids.

He also noted that while a company may have the right to establish the terms by which a customer may use its product or services, it cannot revise its terms of use in a way that violates antitrust laws.