Last month, in a much heralded international event, the agreement that ICANN (Internet Corporation for Assigned Names and Numbers) held with the United States Department of Commerce was permitted to lapse and so ICANN became an independent manager of the Internet’s addressing system. While some argued that the organization was not “ready” for the transition, the majority of ICANN’s multi-stakeholder community, including Afilias, agreed that sufficient accountability measures were in place to ensure that ICANN remains a responsible (and responsive) international organization.

Ensuring competition and choice in domain names has been an essential feature of ICANN’s construct since formation over 15 years ago and it remains one of the core values enshrined within ICANN’s post-transition bylaws. The first real test of this core value is now upon ICANN: what to do about the significant violations that occurred in the ICANN run auction process for the .WEB top level domain (TLD).

Afilias is a longstanding, active and constructive member of the ICANN community. We are strongly supportive of competition and choice in the domain name market and we are one of the applicants for .WEB.

.WEB background

ICANN finalized a process in 2011 to further enhance competition and choice in domain names by expanding the top level domain space beyond the legacy .COM, .NET, .ORG and prior round new gTLD addresses. Over 1300 new top level domains were applied for, and over 1100 have already launched. These include addresses as diverse as .BERLIN, .BIO, .RED and even “dotBrands” like .BNPPARIBAS. The .WEB TLD was one of these and it has taken significant time to come to auction. It is short, generic and expected to be especially attractive to registrants. Seven applicants applied for .WEB in 2012, but the TLD has in fact been sought after since ICANN’s first nTLD application round back in 2000.

The process for determining a registry operator when multiple applications are received is defined in the Applicant Guidebook (AGB). This document is the authoritative procedure manual for all aspects of the nTLD process. Consistent with the AGB, all .WEB applicants had agreed, as recently as 11 May 2016, to resolve the contention set via a private mechanism (a private auction). However, a few weeks prior to the scheduled private auction on 15 June 2016, one applicant - Nu Dot Co - mysteriously backed out, forcing an ICANN auction (the last resort process), which had been scheduled for 26 July 2016.

The AGB is clear: it specifies that an “applicant may not resell, assign or transfer any of the applicant’s rights or obligations in connection with the application.” Why did Nu Dot Co back out of the private auction process? Several parties asked ICANN to investigate Nu Dot Co, specifically with respect to alleged changes in ownership or financial control of the company. In response, ICANN enquired of Nu Dot Co in writing, whether any such changes had occurred. Nu Dot Co responded and denied that any such changes had taken place. ICANN dropped the matter and proceeded with the auction.

In the 26 July 2016 ICANN auction, Nu Dot Co was indeed the high bidder, with a record bid for a TLD that exceeded US$135m. Shortly thereafter, a third party that had not applied for .WEB announced publicly that it had secretly arranged to fund Nu Dot Co’s bid and moreover, that it intended (subject to ICANN’s consent) to take assignment of the .WEB registry agreement from Nu Dot Co after the auction was over—a direct contravention of the AGB rules against assignment.

ICANN’s new TLD process was specifically designed to disqualify this kind of behaviour. The restrictions on reselling, assigning or transferring rights exist in the AGB for good reason. Such behaviour is not transparent and damages the honest auction participants. In this case, because the intervening party is already dominant in the market, it also reduces competition in domain names. The potential outcome is contrary to ICANN’s core values and contrary to the extensively deliberated, community approved procedures laid out in the AGB.

What ICANN needs to do

If ICANN permits the auction result to stand, it may not only invite further flouting of its rules, it will grant the new TLD with the highest potential to the only entity with a dominant market position. This would diminish competition and consumer choice and directly contradict ICANN’s values and Bylaws. The ICANN board and, under its direction, ICANN itself, can stand-up for competition and consumer choice by disqualifying the NuDotCo application.

All Eyes will be on ICANN57 in Hyderabad

The next ICANN Board meeting is at the global community meeting in Hyderabad, India from November 3-9. This is also the first global community meeting to occur after ICANN gained independence, and hence is pivotal for ICANN’s emerging reputation as an independent, international organization. Given the controversy over ICANN’s independence, all eyes will be on the ICANN board to see if it is focused on doing the right thing. It’s time for the ICANN board to show resolve and to demonstrate that it is a strong, independent body acting according to the letter and spirit of its own AGB and bylaws and, perhaps most importantly of all, to actively demonstrate its commitment to act independently and in the global public interest.

A more detailed post on this subject is available here.