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ICANN and Legalities

Bret Fausett points to two lawsuits against VeriSign and ICANN for violating U.S. anti-trust laws. They state the obvious: VeriSign and ICANN made an agreement that is to the large financial benefit of the two corporations and the financial detriment of nearly everyone else.

The proposed contract is absurd, but so is ICANN’s request that people comment on it before ICANN approves it. Anyone familiar with legal negotiations could see that there is no room for significant negotiation on the part of ICANN. In the extremely unlikely case that ICANN listened to the near-universal condemnation of the contract and went back to VeriSign with significant changes, VeriSign would think about it for about two seconds and say “no, we’ll just keep suing you”.

The real issue is that ICANN has completely blown it as a non-profit corporation. In the U.S., being a non-profit corporation means you have many responsibilities to the public that normal corporations don’t. In exchange for you meeting those responsibilities, you get both a different tax liability (essentially: no taxes) and you get to parade yourself around as a “non-profit”, which in turn brings you greater credibility in some circles. ICANN certainly touts its non-profit status in many places, particularly on their own web site.

ICANN became a non-profit after the U.S. and California reviewed ICANN’s articles of incorporation. There, ICANN promised:

The Corporation shall operate for the benefit of the Internet community as a whole, carrying out its activities in conformity with relevant principles of international law and applicable international conventions and local law and, to the extent appropriate and consistent with these Articles and its Bylaws, through open and transparent processes that enable competition and open entry in Internet-related markets. To this effect, the Corporation shall cooperate as appropriate with relevant international organizations.

A normal, for-profit corporation, rarely makes any such promises when it organizes. In the seven years since ICANN promised to do that (and, in return, got its non-profit status), it has generally failed to meet these promises. The proposed contract with VeriSign is an amazingly clear abrogation of multiple parts of that promise.

ICANN can move forwards in a couple of different ways. The most likely method would be to vigorously defend its part of the lawsuits (and others that will probably come on the same topic), spending money that would clearly be better spent “for the benefit of the Internet community as a whole”. The outcome of this will be years of uncertainty for all parties involved, a possible massive fine for ICANN, and the possibility that the US or California will take away their non-profit status.

A far better method is for ICANN to finally admit that they are not living up to their articles of incorporation, nor to the general expectations of what a U.S. non-profit should do. They can convert themselves to a for-profit corporation. At that point, their agreement with VeriSign (and anyone else, for that matter) becomes an agreement between two normal for-profit corporations, which have very different, less limited rules.

By increasing the level of honesty about who ICANN is and what it is trying to do, everyone would be better off. Taking this kind of step out of denial is difficult for anyone, particularly for a group of people as large as ICANN’s board of directors. It can and should be done both for the benefit of the stability of Internet and for the long-term benefit of ICANN itself.

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Vittorio Bertola  –  Nov 30, 2005 7:05 AM

Oh well, I really can’t wait to see ICANN become a for-profit U.S. Corporation.
You’d get blue helmets landing in Marina del Rey in five seconds - and at least a couple of major root server splits in the Internet.

Paul Hoffman  –  Nov 30, 2005 6:18 PM

Oh well, I really can’t wait to see ICANN become a for-profit U.S. Corporation.

That’s the problem: it already is very clearly for profit. The profits don’t go to “shareholders”, but they certainly go to self-perpetuation.

You’d get blue helmets landing in Marina del Rey in five seconds


- and at least a couple of major root server splits in the Internet.

Why on earth should a root server care about the tax status of ICANN? Wouldn’t they prefer an honest ICANN?

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