The $135 Million Proxy Bid That Shook the Domain Industry

The auction for the .web top-level domain in July 2016 was supposed to be a straightforward affair. ICANN, the nonprofit that oversees the internet's naming system, had received multiple applications for the coveted extension — a broad, intuitive string that could rival .com in popularity. When multiple parties want the same gTLD, ICANN runs a last-resort auction: highest bidder wins, all proceeds go to ICANN. The previous record for a new gTLD auction stood at around $41 million. The .web bidding blew past that within minutes.

By the time the gavel fell, an entity called Nu Dot Co LLC had bid $135 million — more than three times the old record, seven times the average. The winner was a company no one in the industry had ever heard of. It had no website, no track record, no visible infrastructure. Its listed managers were two executives from a small consulting firm. The domain world erupted in suspicion.

A Proxy with Deep Pockets

Nu Dot Co's behavior during the auction process only deepened the mystery. Before the public auction, ICANN offers applicants a chance to settle contention sets through private auctions, where the winning bid is split among the losing bidders. This gives everyone a financial consolation prize. Nu Dot Co refused. It insisted on the public auction, where the full $135 million would vanish into ICANN's coffers, leaving its rivals with nothing. That refusal suggested Nu Dot Co didn't need to share the spoils — it had capital to burn and a strategic motive that outweighed the cost.

The day after the auction, the mystery solved itself. Verisign, the longtime operator of .com and .net, announced it had "entered into an agreement" with Nu Dot Co and had "provided funds for Nu Dot Co's bid for the .web TLD." The internet's most powerful registry had secretly bankrolled a proxy to capture a potential rival to its crown jewel.

Competitors Cry Foul

The reaction from other bidders was immediate and furious. Afilias, the runner-up, and Donuts Inc., a major new-gTLD portfolio holder, had both bid tens of millions in good faith. Donuts had even sued ICANN before the auction, seeking a restraining order to halt the process until Nu Dot Co's beneficial owners were disclosed. ICANN and Nu Dot Co executives signed affidavits swearing the listed managers were in sole control. A judge denied the injunction. The auction proceeded.

Once Verisign's funding was revealed, Donuts amended its complaint, demanding $22.5 million from ICANN and alleging negligence, breach of contract, and violation of the new gTLD program rules. The core accusation: Verisign had used a shell company to circumvent transparency requirements and potentially suppress competition for .com by acquiring its most threatening alternative at an inflated price that no genuine startup could match.

The Government Steps In

The controversy escalated beyond civil litigation. In January 2017, the U.S. Department of Justice's antitrust division issued a civil investigative demand to Verisign, requesting information "relating to Verisign's potential operation of the .web gTLD." The probe examined whether Verisign, already a dominant player with government-conferred monopoly rights over .com, had abused its position by paying a supersized premium to neutralize a competitive threat. Verisign CEO D. James Bidzos stated the company was cooperating but declined further comment, maintaining that "the industry is extremely competitive."

For a year the investigation hung over the .web delegation. ICANN's own board reviewed the matter. In May 2023 — nearly seven years after the auction — an Independent Review Process panel concluded that ICANN had breached its bylaws by failing to definitively rule on the legitimacy of Verisign's tactics. The panel kicked the decision back to ICANN's board, which finally ruled that Verisign's participation with Nu Dot Co was "appropriate and within ICANN's policies and guidelines." The path cleared for Nu Dot Co's application to proceed.

The Investigation Ends Quietly

In January 2018, the Department of Justice closed its investigation without taking action. No charges, no consent decree, no public explanation. The $135 million bid stood. Verisign, through its funded proxy, had secured the rights to .web — a domain it had not applied for directly, acquired through a vehicle that did not exist before the auction, at a price that rewrote the economics of the gTLD program.

As of 2025, .web has yet to launch as a functioning registry. The years of legal and regulatory limbo delayed its delegation. But the saga revealed the lengths to which the operator of the internet's most valuable namespace would go to control its periphery — and the willingness of regulators and ICANN to ultimately bless the maneuver. The auction was never really about .web. It was about protecting the moat around .com.

This is one episode in a much longer story. For the full account of the battle for control of the .web top-level domain, read “Verisign Inc.” by Danielle Murphy on MixCache.com.