When Oversee.net, a downtown L.A.-based Internet company that buys and sells Internet domain names, bought domain auction site SnapNames.com Inc. in 2007, it seemed like a savvy move.

But now, serious trouble has emerged at the Portland, Ore.-based subsidiary.

Oversee last week dropped a bombshell when it revealed that a SnapNames employee appeared to engage in “shill bidding,” or driving up the prices of domain names that were up for auction.

Mason Cole, a spokesman for Oversee, said the employee was fired Nov. 2. The company declined to name the fired employee.

Oversee is a major player in the domain name market, where speculators buy up the names of Web sites and treat them as virtual real estate. The owner of a site with a popular name – Books.com, for instance – can potentially make millions of dollars by selling it to another individual or company.

SnapNames is an auction site where users can bid for ownership of available domain names. SnapNames takes a cut of the revenue from the auction, but the company does not say how much.

Last month, Oversee executives discovered that a SnapNames employee, acting alone, had routinely bid on domain names up for auction on the Web site between 2005 and the third quarter of 2009, a violation of SnapNames’ policy. About 1 million auctions took place during that time period; the employee bid on about 5 percent of them, according to a statement from the company.

The shill bidding drives up the price, and thus buyers pay more than they would have. As a result, SnapNames could get a higher commission.

Most of the time, the employee lost the auction. On the occasions that the employee did win, it was later discovered that he sometimes secretly arranged for SnapNames to refund a portion of the winning bid. The employee then owned a domain name without having paid the real auction price.

It’s against Oversee’s policy for an employee to bid on an auction managed by the company or one of its subsidiaries, Cole said. Oversee is reimbursing users who were impacted by the employee’s actions. In addition, Oversee has implemented new measures to try to prevent a repeat performance by another employee.

“SnapNames deeply regrets this situation and is committed to addressing its customers’ needs quickly and fairly,” Oversee said in a statement.

Big Partnership

OpenX Technologies Inc., an Internet advertising company in Pasadena, announced it had signed a partnership deal last week with Microsoft Corp.

OpenX claims to be one of the largest independent ad servers in the world, with more than 50,000 Web site owners using its free software. OpenX’s product helps site owners configure and manage ads on their Web pages. It also allows them to track ad performance so they can determine how to reap the most money from their site.

OpenX’s partnership with Microsoft, which was announced Nov. 2, will work two ways. The Seattle-based computing giant will now refer some of its customers who want an ad server for their Web sites to OpenX. In return, OpenX will promote to its users a Microsoft service called Content Ads, which matches ads to a Web site’s content. For instance, a site about cake recipes that uses Content Ads might display ads for baking supplies.

Financial terms of the partnership were not disclosed. The deal is scheduled to run multiple years, though OpenX and Microsoft declined to say how many.

It’s potentially a significant step for OpenX because it links the up-and-coming ad tech company to one of the giants of the Internet. Tim Cadogan, OpenX’s chief executive, did not specify how many new Web publishers OpenX could gain through the partnership, but said it was projected to be significant.

“It’s sort of a landmark event for us,” Cadogan said.

The partnership was born from a trial run the two companies did in summer 2008, when OpenX promoted Content Ads to its Web publishers. Microsoft executives were pleased enough with the results that they decided to formalize the partnership.

Giiv Money

Giiv Inc. is an L.A. startup that allows people to buy movie tickets for their friends as gifts via cell phone. But it looks like it wants to expand its repertoire to include a wider choice of presents. And the $2.3 million it just received from investors may help.

Giiv’s Web site allows users to buy Fandango.com movie tickets by entering a friend’s cell phone number. The friend gets a text message with a redemption code, then goes to a computer, logs on to Fandango and prints out the tickets.

Giiv’s Web site has pictures of coffee, cupcakes and shoes, which suggests other items it could offer in the future. The company did not respond to a request for comment.

Giiv did not specify who its latest investors were. There were three individuals or institutions that were part of the fundraising round, according to a Securities and Exchange Commission document.

Staff reporter Charles Proctor can be reached at [email protected] or at (323) 549-5225, ext. 230.