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Thumb on the Scales

Does the ICANN Board putting its thumb on the scale, change the status quo assumption of a Policy Development Process (PDP)? The primary assumption of most PDPs is that, in the absence of consensus for change, the status quo remains. Otherwise, Policy would be made by fiat by the PDP’s Chair or Co-Chairs and there would be a mad rush to occupy those unpaid, thankless positions. Whether or not the ICANN Board’s weighing in on an outcome that it wants to see shifts the presumption from status quo to whatever the ICANN Board wants is a question that has appeared in the SubPro PDP Working Group, or rather, whether or not an interpretation by a small group within that PDP of what they think the ICANN Board wants shifts the presumption. It appears that there is a real possibility that the Working Group may get the answer wrong. Here’s what is going on:

SubPro is considering what to do about so-called “private auctions.” There are a handful of voices within the PDP that do not like private auctions and believe that there is something nefarious about them. So far, no compelling problem statement has been set forth, and when pushed, these voices point to public comments on the PDP’s initial report made by the ICANN Board in which the ICANN Board indicates its distaste for the gaming of private auctions. From this, proponents of banning private auctions imply that the ICANN Board has called for a ban. But this is not what the ICANN Board said. The ICANN Board said:

“Regarding question 2.7.4.e.2 on ‘gaming’ or abuse of private auction, the Board believes that applications should not be submitted as a means to engage in private auctions, including for the purpose of using private auctions as a method of financing their other applications. This not only increases the workload on processing but puts undue financial pressure on other applicants who have business plans and financing based on their intention to execute the plan described in the application. In particular, we are concerned about how gaming for the purpose of financing other applications, or with no intent to operate the gTLD as stated in the application, can be reconciled with ICANN’s Commitments and Core Values.”

Proponents of the ban seize on “applications should not be submitted as a means to engage in private auctions” and read that as a ban on private auctions. However, if the ICANN Board’s desire was to ban private auctions, they could have stated clearly and directly. Instead, the ICANN Board appears to want guardrails around applications to prevent them from being filed without intent to operate the TLD and/or in order to use the applications as tickets into private auctions to collect sums to pay for their other applications. The ICANN Board has not rejected private auctions at all, but rather they seek to eliminate applications that are submitted to game the system. Therefore SubPro should focus on rules to discourage bad faith applications.

Even if the ICANN Board had called for a ban on private auctions, which it hasn’t, we should keep in mind that:

  • the ICANN Board has a financial interest in the so-called auctions of last resort—all of those funds go to ICANN. In the past, the ICANN Board has used tens of millions of dollars from the last round’s auction proceeds to pay for ICANN’s overspending. There is even a plan percolating up from the CCWG on Auction Proceeds that would allow ICANN to set up a grant-making department in order to distribute auction funds to projects that ICANN wishes to influence.
  • the ICANN Board is not supposed to interfere in the bottom-up consensus policy formation process (that’s what bottom-up means). A small group within a PDP latching on to a questionable interpretation of ICANN Board intent should not be sufficient to shift a PDP away from the presumption of status quo absent consensus for change.
  • the ICANN Board’s public comments should never serve to shift the presumption away from the status quo absent consensus—otherwise, PDPs are irrelevant. The GNSO Council is clearly free to accept or not accept Policy Recommendations that come up to it from a PDP. Likewise, the ICANN Board is clearly free to accept or not accept Policy Recommendations that come up to it from the GNSO Council. Taking the position that a WG must bend to public comments on a PDP initial report made by the ICANN Board would result in the ICANN Board placing its thumb on the scale early in the multistakeholder policymaking process. Such a result clearly short circuits that process. Worse yet, if a WG must bend to one small group’s narrow view of the public comments made by the ICANN Board, that results in the small group being able to place the ICANN Board’s thumb on the scales!

Those who see a value in private auctions and other market-based, creative solutions as a means to resolve contention sets between two or more good faith applicants in the next round of new gTLDs believe private auctions are consistent with the bedrock idea that ICANN is meant to be a private-sector solution to who runs the names and numbering system. These advocates, including yours truly, have suggested some reasonable guardrails around applications to deal with the concerns raised by the ICANN Board. To be clear, the status quo is applications without these guardrails. Hopefully, members of the working group can reach consensus on reasonable application guardrails. Forcing through a ban on private auctions where there is no consensus to do so, also forces through a change in how ICANN’s multistakeholder model functions placing the ICANN Board, or rather those who claim to speak for the ICANN Board, as the shifters of status quo. Let’s stick with the multistakeholder model instead.

By Paul McGrady, Attorney / Author

Filed Under


Auctions & new gTLDS John Poole  –  Jun 13, 2020 3:58 AM

ICANN’s 2012 expansion of gTLDs turned out to be a fiasco on so many levels, reflecting ICANN’s inherent issues of incompetence, corruption and capture, and no doubt the next round of expansion of gTLDs will likely prove to be just as problematic based on the work product thus far coming out of the SubPro. ICANN’s system of gTLD auctions (including private auctions) is morally repugnant, inconsistent with the letter and spirit of RFC 1591, drives up costs that can only be recovered thru higher pricing passed on to registrants, games the system in favor of the richest applicants and gTLD applicants whose only interest is to profit from private auctions’ proceeds, and is anticompetitive and contrary to ICANN’s articles and bylaws, i.e., promotion of competition within the DNS, which can only be accomplished by following the advice given to ICANN in December, 2008, from the US Department of Justice Antitrust Division via NTIA (see pp. 4-11), which ICANN has failed to do. So Paul, if you and others on the SubPro want to make an effective improvement in how ICANN conducts expansion of gTLDs, read and follow that 2008 advice from the US DoJ Antitrust Division, and abolish all private and public auctions as conducted in the last round of expansion of gTLDs.

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