Cybersquatting or domain squatting, is a derogatory term for the registration of terms as Internet domain names, which the registrant is not entitled to. The registration of personal names is also called namejacking, that of brand names as brandjacking. When registering names and parts thereof associated with persons of public interest such as musicians, politicians or athletes, there may be room for an overlap between the two approaches.
Often, cybersquatters register such domains and offer them to the person or company that owns a trademark included in the domain name. They usually charge a high price, which is far above the original registration fee. To put pressure on the rights holder, some cybersquatters provide the domain’s website with content that evokes negative associations with the offer of the person or company concerned. In this way, they hope that the person concerned will buy the domain sooner, and also be able to remove the unwanted content. Most cybersquatters register multiple variants of a domain to prevent them from being registered by the people or companies themselves.
A variation of cybersquatting is the so-called typosquatting, i.e. the registration of typo domains.
The term cybersquatter is sometimes also used for people who register a large number of domains without interest in later self-use, or generally for all persons who acquire domains specifically for later resale. The cybersquatter then offers these domains to an interested party with “better rights” or a special interest at a potentially quite high price, an act considered by some to be blackmail. Because of the identity or similarity with his company name, personal name, brand or product name, the rights holder feels a high pressure to acquire the domain. This often unfavourable negotiating position results in the often considerable price demand, which thus differs from price formation on the free market. If the interested party has better rights, however, arbitration proceedings and the ordinary legal process are open to him. While this may seem problematic from a moral point of view, it is not objectionable from a legal point of view in a large number of cases. However, this behaviour is better referred to as domain grabbing.
Economically, cybersquatting is a form of speculation. Cybersquatters register (buy) domain names on favourable terms, from which they expect a high resale value. Since the registration and maintenance prices start on average in the double-digit range and the sales prices from three to four-digit amounts, the return is close to 100% of the sales proceeds.