It has approved a deal under which domain registrar Verisign will keep control of internet addresses ending in .com, but it will have to give up control of the .org domain.
The agreement follows concerns by the US Justice Department about Verisign's dominance in the market and is intended to allow greater competition in the business of registering internet addresses.
Although who runs the suffix will not directly affect how people navigate the internet, it could affect such things as prices for domain names.
Concerns about competition
The general terms of the deal were originally hammered out between the Internet Corporation for Assigned Names and Numbers (Icann) and Verisign in April. But is was subject to US approval, as the Commerce Department has the power to veto Icann decisions.
Domain names are key to finding websites and sending e-mail, and Verisign runs databases for the three most popular domain name suffixes: .com, .net and .org, controlling 50% of the market.
Verisign and its predecessor, Network Solutions, have been running the domain name databases for the government since 1992.
Following this deal, Verisign will keep control of the popular .com domain until 2007 and can renew its control at that point. It earns $6 for each name registered.
Rights to the .org domain and $5 million will be given to a nonprofit organization in 2002. Competitive bidding for the .net domain will be moved up to June 2005, six months earlier than originally planned.
Antitrust clause
Verisign agreed that approval of the deal did not exempt it from antitrust laws.
It also agreed to undergo annual audits to ensure that it is keeping separate the business of signing up customers for the internet addresses from the business of maintaining those domains.
"It certainly provides us clarity to move forward in our business and gives us the focus we've been seeking," said company spokesman Brian O'Shaughnessy.
Critics had termed the Icann deal a windfall for a large company and complained that it was negotiated in secret with almost no community input.
"I thought it would be a rubber-stamp, but it looks like it was slightly less than rubber-stamp," said Larry Elrich, president of competing registry Domainregistry.com.
"The only ray of hope is the fact that they agreed that they don't have the immunity to antitrust."