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Is Google Trying To Ruin GoDaddy's Very Sexy IPO?

Stocks in this article: GOOG

NEW YORK (TheStreet) -- It's just what an industry leader doesn't need - especially at this point in time. Just weeks after announcing its plans to go public, GoDaddy is now faced with another company entering the domain registration field - only this time the competition is Google (GOOG), owner of the world's largest digital advertising platform.

On Tuesday, Google announced Google Domains. Currently in beta the service is meant to help the 55% of small businesses in this country without Websites to get online for the first time. At the moment Google Domains is by invitation only.


Earlier this month, Go Daddy, probably best known for its racy Super Bowl ads, filed with the Security and Exchange Commission its plans to raise up to $100 million in an IPO. The company had originally attempted an IPO back in 2006 but later canceled it due to what at the time it called "market uncertainties".

The Scottsdale, Arizona-based company is privately held with Kohlberg Kravis Roberts, Silver Lake Partners, and Technology Crossover Ventures holding a majority stake. Although exact terms of the deal were never publicly revealed, reports placed private equity's stake at 65% stake in the company, a transaction that cost roughly $2.25 billion.

In an email commenting on Google's announcement Mike McLaughlin, GoDaddy's Senior Vice President & General Manager of Domains told The Street

"We have worked with Google over the years and they continue to be a valuable partner of ours.  In our view, the world's domain name market is thriving right now. GoDaddy's been in the domain registrar market for more than 15 years. We are quite confident in our ability to serve customers and will remain focused on them." ​​

The new Google Domains plans to offer customers the chance to register new domain names but won't offer tools to help build the actual website. Google suggests dealing with one of its partners that specialize in quick and easy website construction such as Shopify, Squarespace, Wix and Weebly.

Google stock was advancing more than one percent to $570.94 in late morning trading in New York.

Google believes a number of features including an offer of extended customer service will set it apart from the others. Google says it will provide both email and 12-hour phone support weekdays and will let you create as many as 100 email aliases for your new account. Plus, your new google.com address will be using the same, usually stable servers as all the other Google.com addresses.

For the time being Google's invitation is being offered to small businesses only and the company isn't saying whether or when the service might be extended to others.

Liam Eagle of 451 Research stated, via email, that Google's latest move might not be a slam dunk:

"Google certainly has the strong brand and massive scale to make an immediate impact. But domains are an extremely commoditized market, so if the company is planning to undercut the big providers, it is basically committing to losing money. Go Daddy has more than 55 million domains under management, and is not currently turning a profit.

A new competitor the size of Google is a negative for Go Daddy's IPO. But it has plenty of competition in the space already, and remains the market leader by a significant margin. Out of the gate, Google's brand doesn't necessarily position it as a major registrar, but I suspect there is more to it."

-- Written by Gary Krakow in New York.

To submit a news tip, send an email to tips@thestreet.com.

Gary Krakow is TheStreet's senior technology correspondent.

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