Mystery gTLD applicant to take Google fight to lawmakers

Kevin Murphy, February 13, 2013, 10:34:31 (UTC), Domain Policy

An as-yet unidentified new gTLD applicant plans to lobby Washington DC and Brussels hard to get dozens of Google’s new gTLD bids thrown out of ICANN on competition grounds.

Phil Corwin of the law firm Virtuallaw, who is representing this applicant, told DI yesterday that his client believes Google plans to use new gTLDs to choke off competition in the web search market.

“They’re trying to use the TLD program to enhance their own dominance and exclude potential competitors,” Corwin said. “We think this should be looked at now because once these TLDs are delegated the delegations are basically forever.”

He’s planning to take these concerns to “policy makers and regulators” in the US and Europe, in a concerted campaign likely to kick off towards the end of the month (his client’s identity will be revealed at that time, he assured us).

Corwin’s client — which is in at least one contention set with Google, though in none with Amazon — reckons ICANN’s new gTLD program is ill-suited to pick the best candidate to run a gTLD.

If objections to new gTLD applications fail, the last-resort method for deciding the winner of a contention set is auction. Google obviously has the resources to win any auction it finds itself in.

“On any TLD Google has applied for, nobody can beat them,” said Corwin. “They have $50bn cash, plus the value of their stock. If they want any of the TLDs they’ve applied for, they get them.”

“A string contention process that relies solely on an auction clearly favors the deep-pocketed,” he said.

Google applied for 101 new gTLDs, 98 of which remain in play today. A small handful of the strings are dot-brands (such as .youtube and .google), with the majority comprising dictionary words and abbreviations.

Some of its generic bids propose open business models, while others would have “closed” or single-registrant business models. As we reported on Friday, this has kicked off a firestorm in the ICANN community.

Corwin said that Google appears to be planning to close off not only individual TLDs, but entire categories of TLDs.

For example, Google has applied for .youtube as a brand, but it’s also applied for .film, .movie, .mov, .live, .show and .tube with a variety of proposed business models.

“You can pretty well bet that they’ll exclude those that will pose a competitive threat to YouTube,” Corwin said.

Search will become much more important after the launch of hundreds of new gTLDs, Corwin reckons, as consumers are “not going to know that most of them exist”.

“Generic words are the perfect platform for constructing vertical search engines that can compete against Google’s general search engine,” Corwin said.

“Google is trying to buy up not just one but multiple terms that cover the same goods and services in key areas of internet commerce, and in effect control them so competition cannot arise and challenge Google’s dominance as a search engine,” he said.

Google has not yet revealed in any meaningful way how its search engine will handle new gTLDs.

The US Federal Trade Commission, at the conclusion of an antitrust investigation, recently gave Google a pass for its practice of prominently displaying results from its own services on results pages.

With that in mind, if Google were to win its contention set for .movie, but not for .film, is it possible that .movie would get a competitive advantage from preferential treatment in search?

Corwin reckons that Google anti-competitive intentions are already suggested by its strategy in ICANN’s new gTLD prioritization draw, which took place in December.

Of the roughly 150 applications for which Draw tickets were not purchased, Google is behind 24 of them — including .movie, .music, .tube and .search — 22 of which are in contention sets.

As a result, these contention sets have all been shunted to the back of ICANN’s application processing queue, adding many months to time-to-market and costing rival, less-well-funded applicants a lot of money in ongoing overheads.

“We see Google playing a rather different game here to most other applicants in terms of their motivation, which is not to enter the market but to protect their market dominance,” Corwin said.

Corwin said the game plan is to taken all these concerns to policy makers and regulators in the US and Europe in order to get governments on-side, both inside and outside of the ICANN process.

Corwin is also counsel and front-man for domainer group the Internet Commerce Association, but he said that the new anti-Google drive is unrelated to his work for ICA.

So why is his client only bringing up the issue now? After all, we’ve all known about the contents of every new gTLD application since last June.

My hunch is that Google is playing hard-ball behind the scenes in settlement talks with contention set rivals.

Contention sets can be resolved only when all but one of the applicants drops out, either following an ICANN auction or private buy-outs. Most applicants favor private resolution because it offers them the chance to recoup some, all, or more than the money they splashed out on applying.

That game plan probably does not apply to Google, of course, which is not wanting of funds. The company may even have good reason to prefer ICANN auctions, in order to to discourage those who would apply for new gTLDs in future just in order to put their hands in Google’s pockets.

The topic of closed generics and competition is likely to be a hot-button topic at ICANN’s next public meeting, coming up in Beijing this April.

Members of ICANN’s Governmental Advisory Committee have already expressed some concerns about many “closed gTLD” applications made by Google, Amazon and others.

ICANN’s board of directors is currently mulling over what to do about the issue, and has thrown it open to public comment for your feedback.

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Comments (9)

  1. Rubens Kuhl says:

    Competition issues is the one thing that can hurt Google, Amazon and L’Oreal applications. It’s written in the AGB, but ICANN failed (as far as we know) to reach out to the FTC and the EC Competition Authority. If anybody else does, and get at least one of them to open an investigation into this matter, ICANN will have no alternative to postpone contention set resolution, or ICANN board will have to postpone delegation of uncontested strings.

    This is how this game is played, not by crying wolf to closed generics.

  2. Dave Tyrer says:

    Google says that by operating .SEARCH as a closed registry, it will thereby promote competition by inciting it’s competitors to improve their gTLD operations.

    This is what Google’s application actually states:

    18.b.ii.1.
    Competition:

    “.search will operate as a closed gTLD. It will provide Google with the opportunity to differentiate and innovate upon its Google Search products and services through its use of the gTLD. This will promote competition in the gTLD space by inciting competitors to respond with improved gTLD operations, greater range and higher quality products and services, and/or the creation of their own respective gTLDs, to the benefit of all Internet users…”

    There’s more on this on the ‘ICANN Claims’ page at SuperMonopolies.com

    • Rubens Kuhl says:

      Microsoft having applied to .bing, and the product being called Google Search long before this round of new gTLDs, only add to Google’s reasoning.

      But this should not be up to me or you, but to competition authorities with much more experience on this.

      • gpmgroup says:

        But this should not be up to me or you, but to competition authorities with much more experience on this.

        This statement is a cop out and as such can be used disingenuously by people who wish to give the impression they are not an ex-parte participant.

        ICANN is tasked with managing the DNS and with their proposed framework for new gTLDs they had a blank sheet of paper. They have the responsibility for designing a framework which is equitable to all rather than one which favors their own contracted or would be contracted parties over all others. Especially when the costs are all to often to be borne by innocent third parties.

        Much anti-trust legislation is concerned with existing markets rather than a regulator’s inability to design a new level playing field for all to compete on.

        • Rubens Kuhl says:

          Competition law is a minimum baseline, but what framework(s) do you suggest ICANN could have followed beyond competition law ?

          • gpmgroup says:

            There is much space here, and the issues are involved are complex….

            At a high level the aim should be to build a framework that aligns individual profit motivation with the wider public good. Aligning it too closely with contracted and would be contracted parties’ private interests simply leads to a greater probability of people trying to blow unsustainable speculation bubbles.

            Throughout the process several issues, some fundamental, were raised but, people at all levels were too busy tripping over themselves rushing out the door to secure advantage to care.

            Take vertical integration. The current registry/registrar framework has been a phenomenal successful, an approach which has added huge value to the industry and at the same time provided enormous public benefits.

            However some industry players, many of whom wouldn’t even exist if the current policy wasn’t in place, wanted it changed, so it was forced through in a cleverly constructed top down mandated operation so those rushing to take advantage of new gTLDs could get the new policy in place before they were approved.

            .xxx was another example, a huge majority of individuals, organisations, companies and governments were opposed to it, but ICANN and some of its contracted parties wanted it so they passed it.

            When those tasked with the responsibility for managing the DNS behave more like an industry lobbying group than regulators or custodians of probably the greatest invention in the history of mankind, it doesn’t bode well for building sustainable future successes.

  3. Philip Corwin says:

    Kevin:
    A few clarifying notes:
    -Our aim is not necessarily “to get dozens of Google’s new gTLD bids thrown out of ICANN on competition grounds”. Google is certainly entitled to their .brand applications, and may be qualified to operate some open registries if questions about search engine bias and overall competition can be satisfactorily resolved. Our aim is to raise serious questions with policymakers, regulators, and within the ICANN community that result in the new gTLD program achieving its stated aim of fostering competition and innovation, not bolstering existing Internet dominance and business models.
    -We share the concerns that have been expressed by so many others regarding the impropriety of permitting closed single-registrant gTLDs to be operated by applicants who hold no trademark rights in the term comprising the gTLD string. That exception to the standard Code of Conduct was intended for .brand registries and it is unfortunate that the new gTLD Program Committee failed to reiterate that narrow purpose and has instead put the isssue out for public comment, guaranteeing that it will be a major issue of controversy (perhaps the major issue) in Beijing.
    -Concerns about Google’s applications go beyond the single-registrant issue because of its monopoly position in search and dominant role in Internet advertising, both of which will be critical factors in the success of new gTLDs and the domains registered at them. In this regard, Google’s voluntary and legally unenforceable commitments made to the FTC at the conclusiuon of its search bias investigation apply only to “covered webpages” and specifically exclude broad categories of key Internet activities, including “video search”, a category in which Google has submitted eight separate applications in addition to .YouTube — Google has explicitly reserved the right to favor its own registries and businesses in search results. Further, while Google’s key defense in the FTC investigation was that “competition [among search engines] is just a click away”, its gTLD applications evidence an intent to ensure that competition is never a click away.
    -We have no desire or intent to cause delay for the entire new gTLD program. There is no reason why the questions posed by Google’s non-.brand bids that are in contention need delay the overall program. Further, those in contention with Google on such bids suffer no harm from any delay as they have no hope of prevailing at auction (indeed, they may have already been delayed by Google’s decision to not purchase prioritization lottery tickets for 22 generic gTLD applications that are in contention); and in the case of closed or restricted gTLDs potential registrants suffer no harm as they would have no opportunity to obtain domains as independent registrants.
    Thanks again for covering this important matter.
    -Philip

    • Rubens Kuhl says:

      The exception to the code of conduct is only required to have a single registrar instead of multiple registrars. Google cannot apply to such exception in .blog, for instance, as .blog will have content from entities not affiliated (Affiliate with capital A, legal definition of it) with it.
      Eligibility requirements, like saying that only Google can register in .search, do not require the exception to the code of conduct. They could specify that only companies whose names start with G could register .search domains: google.search, gmc.search, goodyear.search, gec.search, gte.search…

  4. Rolf Larsen says:

    I do believe many “closed” or single-registrant business models for key dictionary words and abbreviations will be hard to get approval for in this program. But Im afraid that will have little impact on these applicants, as ICANN may allow them to change major parts of their applications to become “open” business models. Is it fair play, if that´s the outcome? I think not..

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