Microsoft tinkered with the browser settings in an IE upgrade last month, capitalizing on misspelled or nonexistent domain names typed into the address bar by diverting people to an MSN Search page.
But much of that traffic is supposed to travel through XTNS, which directs someone entering a nearly correct Web address, such as "ibm.co," to the page most likely intended. The new IE feature also catches simplified addresses such as "store.disney" or "movie.gladiator" or "corp.ibm"--all for sale as "namespaces" through XTNS' deal with RealNames.
Microsoft would not comment on the domain name companies' agreement, saying it is not directly involved.
RealNames Chief Executive Keith Teare confirmed the problem, saying it stems from the recent IE upgrade. But he doesn't expect any changes to the browser's autosearch.
"XTNS namespaces that have a period...have ceased to function," he said. "We don't think this status will change; it will remain this way for the foreseeable future."
The glitch highlights the ongoing problems facing a handful of start-ups that have long tried to promote alternatives to the mainstream domain name system. In this case, XTNS Chief Executive Tim Langdell thought a deal with Microsoft-backed RealNames would propel his 5-month-old business into the spotlight.
But RealNames has been struggling to make its business model fly amid a tech-market slump, despite a 20 percent investment from the software giant and relationships with prominent companies such as eBay.
Neither XTNS nor RealNames would discuss the financial arrangements of their deal.
RealNames' technology places another layer on the DNS (domain name system), which translates a name into a series of numbers that constitutes an Internet address. Similar to America Online's keywords, RealNames and XTNS go a step further by letting Web surfers reach a site without typing "www." or ".com" into the address bar.
A company could buy a RealNames keyword with its name and product, such as "microsoft windows xp," and direct consumers to its Web site or a more specific page. Like RealNames, XTNS lets companies buy domain names related to their products or businesses. But instead of spaces it places a period, or dot, between the terms--for example, IBM could buy the rights to "thinkpad.ibm."
Hundreds of companies have registered such addresses under XTNS' service with RealNames, which went into effect Aug. 15, Langdell said. The Pasadena, Calif.-based company says it was forced to suspend service to about 300 customers because of the new IE feature.
"We were assured that Microsoft was contractually obliged to resolve these domain names that we had bought the rights to, and therefore if Microsoft would stop (allowing people to reach these domain names), it would have to be a breach of contract. And we didn't think that would happen," Langdell said. "It's 30 seconds of code to fix it."
A deal with retailer Amazon.com and the Internet Movie Database is on hold as well, he said. The companies were talking about developing keywords for official movie sites. For example, "movie.gladiator" could go directly to the official site for "Gladiator" or to a page with more information on the film at the Internet Movie Database. But with Microsoft's upgrade, such an address now leads to its MSN Search page.
Although the software giant would not comment on XTNS, it defended the change in IE 6 as a benefit to customers.
"We believe the functionality we're offering customers gives them a better search experience by removing DNS errors and providing them (with) potential results they want," said Sarah Lefko, lead product manager at MSN.
RealNames' Teare was resigned to the new IE feature. The company is sorry to lose a potential product, he said, but "overall we consider the outcome to be positive."
Part of its deal with XTNS can still work, he added. Under the agreement, XTNS can create and sell international multilingual domains in over 150 different languages.
"The harsh truth is that XTNS has to investigate their strategy for the deployment of namespaces based on the RealNames platform in light of the changes," Teare said. "That's the bare-bones fact."