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Microsoft Settles with No-IP Following Massive Domain Hosting Outage

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Microsoft Settles with No-IP Following Massive Domain Hosting Outage

Postby sunnyd » Thu Jul 10, 2014 3:17 pm

In June, Microsoft Corporation filed a lawsuit against Vitalwerks LLC which is the parent company of, a dynamic service (DNS) provider for both paid and free services. On June 30th Microsoft was granted an ex parte temporary restraining order by a court in Nevada allowing the company to seize 23 of No-IP’s domains. The seizure of the domains was carried out without advance notice to No-IP. The suit was filed and the actions were carried out in an effort by Microsoft to disrupt Bladabindi-Jenxcus, which is an expansive family of malware that put millions of customers at risk with PC infections. Microsoft alleged that No-IP failed to take corrective action in stopping malicious activity on its subdomains. The actions taken resulted in a massive DNS hosting outage, lasting three days. In the process of Microsoft trying to filter through and re-route traffic from some of the domains, all of the domains became inaccessible and the outage affected millions of people. Microsoft later admitted that a technical error occurred which caused innocent traffic to be affected in the process. Aside from the outage, there were plenty of outraged people with less-than-friendly comments for how the situation was handled by Microsoft. Microsoft did surrender all of the domains back to No-IP last week, and it was announced today that both Microsoft and Vitalwerks had reached a settlement in this matter.

In joint identical statements posted today by both Microsoft and Vitalwerks, Microsoft dropped its lawsuit against Vitalwerks which alleged that Vitalwerks failed to take proper steps to prevent its systems from being abused by cybercriminals.

Part of the statement by both companies reads as follows:

"Microsoft has reviewed the evidence provided by Vitalwerks and enters into the settlement confident that Vitalwerks was not knowingly involved with the subdomains used to support malware. Those spreading the malware abused Vitalwerks’ services.

Microsoft identified malware that had escaped Vitalwerks’ detection. Upon notification and review of the evidence, Vitalwerks took immediate corrective action allowing Microsoft to identify victims of this malware. The parties have agreed to permanently disable Vitalwerks subdomains used to control the malware.

In the process of redirecting traffic to its servers for malware detection, Microsoft acknowledges that a number of Vitalwerks customers were impacted by service outages as a result of a technical error. Microsoft regrets any inconvenience these customers may have experienced.

Following the joint statement, a separate statement by No-IP was also posted, and stated in part, "By filing an ex parte temporary restraining order (TRO), No-IP was prevented from having any knowledge of the case or offering any support in stopping malicious activity. Had Microsoft submitted evidence of abuse at any time, No-IP would have taken swift action to validate the claims and ban any accounts that were proven to be malicious. Instead, Microsoft wasted many months while malicious activity continued."

While it’s been noted that Microsoft’s motivation in this was for a very legitimate and concerning reason, the company is also being highly criticized as another big corporation getting away with litigation that could set a precedent in the future for similar cases.

A summary of the various court filings in the case, Microsoft Corporation v. Mutairi et al, Nevada District Court, Case No. 2:14-cv-00987, can be found on this link.

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