ABOVENET RUINS COMPETITOR

 

Update: Metromedia seeks protection by filing Chapter 11 Bankruptcy.

 

ABOVENET TELECOMMUNICATIONS, INC., California

and [parent] METROMEDIA FIBER NETWORK, INC., New York

 

Are being sued by former competitor GALAXY-NET TELECOM, INC., for $10 million in Damages and Equitable Relief for alledgedly hacking into Galaxy-Net’s network and computers, reading confidential and privileged information and sabotaging Galaxy-Net’s business relationships in an effort to acquire financial information, business strategies and plans, identities of actual and prospective customers, investors, partners and buyers and other trade secrets in an effort to put them out of business.

 

Among the serious charges dating back to June, 1999 are:

 

• Reading Galaxy-Net’s email, stealing and circulating a confidential Letter of Intent regarding the pending purchase of WEBCASH, a subsidiary of Galaxy-Net.

• Malicious interference with Galaxy-Net’s new business relationship with INTEL, including sending defaming emails to high level management.

• Hacking into an executive’s email, discovering a company’s confidential offer to purchase Galaxy-Net for $500,000 cash plus 100,000 shares of stock, and posting defamatory information on the Internet, killing the deal.

• A significant reduction in bandwidth, disrupting customers.

• ABOVENET's seizure of GALAXY-NET's co-located computers and cut-off of Internet connectivity.

 

Background: GALAXY-NET was a successful Application Service Provider(ASP) and web host company that provided various Internet services to businesses, i.e. web hosting and e-commerce transaction processing in conjunction with doing business online. Their customers used the Internet for profit generating enterprises and depended on the absolute reliability and speed of their service provider. As with any hosting company, customer satisfaction is primary and any disruption of slow down in service causes the loss of customers and damages the provider’s reputation for reliability, impairing its ability to keep existing customers or attract new ones.

 

Unfortunately for GALAXY-NET, they entered into agreements with ABOVENET to locate their servers on ABOVENET premises, making them vulnerable to ABOVENET, who also offered “web hosting” services. It is said that 20-35% of ABOVENET’s revenue at that time came from their customer, GALAXY-NET.  

 

"Danni's Hard Drive" featuring Danni Ashe, reportedly the most downloaded person on the Internet, is hosted by AboveNet. In light of Metromedia's recently disclosed financial problems, Danni may need to find a new home...