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ICANN punts o.com auction to US watchdogs

Kevin Murphy, December 11, 2017, 10:43:20 (UTC), Domain Registries

Verisign’s proposed auction of the domain o.com might have a negative effect on competition and has been referred to US regulators.

That’s according to ICANN’s response to the .com registry’s request to release the domain, which is among the 23 single-letter domains currently reserved under the terms of its contract.

ICANN has determined that the release “might raise significant competition issues” and has therefore been referred to “to the appropriate governmental competition authority”.

It’s forwarded Verisign’s request to the US Department of Justice.

Verisign late last month asked ICANN if it could release o.com to auction as a test that could presumably lead to other single-character .com names being released in future.

The plan is for a charity auction, in which almost all the proceeds are donated to internet-related good causes.

Only the company running the auction would make any significant money; Verisign would just take its standard $7.85 annual fee.

ICANN told the company that it could find no technical reason that the release could not go ahead.

The only barrier is the fact that Verisign arguably has government-approved, cash-printing, market dominance and is therefore in a sensitive political position.

Whether its profitless plan will be enough to see the auction given the nod remains to be seen.

A certain bidder in the proposed auction would be Overstock.com, the online retailer, which has been pressuring ICANN and Verisign for the release of O.com for well over a decade and even owns trademarks covering the domain.

Disclosure: several years ago I briefly provided some consulting/writing services to a third party in support of the Verisign and Overstock positions on the release of single-character domain names, but I have no current financial interest in the matter.

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Comments (7)

  1. Rubens Kuhl says:

    Although the request was punted to DoJ, the RSEP procedure only makes it a 45-day penalty, not a blocking evaluation. So if DoJ doesn’t respond in that time, the request is good to go.

  2. Don Smith says:

    VeriSign proposed a single letter release on one of the more problematic domains.

    there is a MASSIVE cloud over the O.com domain name.

    Simply put, this domain has value to everyone (thousands of business and individuals) and no one company can claim rights to a single character / alphabet domain name. Only 26 of these domains are in existence and they are all individually extremely valuable assets.

    Yet, in the case of O.com – Overstock has a bunch of trademarks on this term. according to USPTO.gov, I count 9 trademarks on “O.COM” – all in the name of Overstock Inc.

    What is Verisign’s position on this conflict of interest? no question, there has been years of back-door discussions between VeriSign and Overstock. VeriSign even says in their proposal “”To the extent of our knowledge, the implementation of the proposed service will not interfere with the intellectual property rights of any third parties.”

    Thus, VeriSign has gone on record and said they are not aware of any interference with IP rights of any third parties. But they also say “There is no proposed sunrise period for the provisioning of the SCDN and, if any disputes arise from the allocation of this SCDN, it is recommended that the Uniform Dispute Resolution Policy be used.”

    So a winner could spend $15 million and someone can challenge the registration with a $1,500 UDRP filing.

    no one entity can claim rights to any single character domain names.

    assuming this auction moves forward, all auction participants should legally agree that no one company has the rights to any single character domain names.

    what is Verisign’s position on this upcoming legal mess? Will VeriSign force auction participants sign a release of liability (to protect VeriSign?) VeriSign also says they will make auction participants agree to “Standard Disclaimers” – but what exactly will this include? VeriSign must detail these disclaimers in this proposal – as any of those disclaimers may have a significant impact on its monopolistic power.

    If ICANN is going to release single character domains – release them all at once and make a broad policy change across the board. Do not carve out exceptions simply because Overstock is applying so much pressure and has hired lobbying law firms.

    Shame on ICANN and the Department of Justice – both of these groups are guilty for letting the .com contract be a no-bid, presumptive right of renewal contract continue to operate, which primarily benefits only one company.

  3. Don Smith says:

    Let’s explore the underline basis of what VeriSign has proposed to ICANN.

    VeriSign has a monopoly over the .COM namespace. They offer domain registration and renewal services. Both cost $7.85 per year and this is done on a first-come-first-served basis. You can register a domain name for $7.85 and you have the right to renew the domain for $7.85. (side note – this is the basic model that allows VeriSign to pocket more than $700 million free cash flow per year. this is a perfect example of a no-bid contract that benefits only one entity.)

    VeriSign is now proposing an entirely new service – selling a .com domain in auction and awarding the domain name to the highest bidder.

    Auctions are entirely different from domain name registrations and renewals. Auctions are entirely outside of the scope and function of the VeriSign registry and what they have contractually agreed to with ICANN and the US Department of Justice.

    VeriSign is a monopoly and has 100% control over the .COM namespace. They should NOT be allowed to sell domains in auction. What gives VeriSign the right to auction off a single character domain name and determine the proceeds should go to charity? Why is VeriSign even leading this huge new policy change????

    All .com domains should be offered on a first-come, first serve basis and this serves as the core foundation for the .com namespace. As it has been run for more than 20 years. Why is VeriSign abusing it’s power to launch a new “auction”? In conjunction with Overstock, who has abused the United Stated Patent and Trademark Office by trademarking a term they, nor nobody owns. Yet VeriSign is collaborating with Overstock.com to grant Overstock rights to the domain O.com?! This is crazy. It is proof that VeriSign is not acting as a steward of the .com namespace, but is abusing it’s power.

    The no-bid, presumptive right of renewal on the .com contract was a horrible mistake – and both ICANN and the Department of Justice have failed to maintain a competitive environment for .com domain names. Ironically, one of ICANN’s core mandates is to promote competition – yet they have handed VeriSign the keys to one of the most lucrative, recurring, money printing machines the modern world has ever seen.

    So now, in 2017 – we have this evergreen contract allowing VeriSign to pocket more than $700 million in free cash (on more than $1 billion in revenue with a market cap in excess of $11 billion) – and they want to expand out the scope of their services and auction off domain names?

    Wake up ICANN and the Department of Justice. How much longer are you going to allow this monopoly (aka gravy train) to continue? In absolutely no circumstance, should you allow VeriSign to auction off domain names.

    VeriSign says the proceeds from this one auction will all go to charity – but what about all of the other reserved domains and other potential cases that could come up down the road? We are talking an estimated $330 million in auction revenue on the remaining reserved single character domains. Is VeriSign possibly trying to make this one unique case for “charity” so that in the future they have proven it can happen and then keep the money for themselves?

    Why should VeriSign be allowed to auction super premium domains and determine who, what and how receives the $330 million in cash?? Are the proposing that all of the auctions will go to non-profits – or only this first text example O.com? VeriSign has a monopoly over .com domain names – don’t be fooled by the greed and how the release of all of the other single character domains will play out.

    ICANN should be leading this charge. VeriSign should not be doing it. In no way should ICANN allow VeriSign to have any additional control over its name space. VeriSign should not have a say in how and/or why any single character domains are released.

    If ICANN really believes single character domains should be released, than ICANN should lead this proposed policy change and manage this entire process. VeriSign should not be involved at all (other than their basic registration and renewal functions and what they have been contracted to do.) When you have one company with a total monopoly because if a single, no-bid contract, they can and will abuse their position.

    If the global internet community wants single character .COM domains released – someone other than VeriSign must manage the process. Someone independent. Someone without enormous conflicts of interest and who is in acting in the best interest of the global internet community.

  4. kd says:

    When ICANN “punts” you know something is not right. Should VeriSign want to give money to charity, it is well in it’s right to do so. It should voluntarily cut a check to charity. But not bake it into changing how .com domain names work!!!

    This proposal is nothing more than BAIT. It is extremely clear that VeriSign is in this only for their bottom line. Instead of being forced to charge realistic prices for .com domains, VeriSign is now trying to introduce “premium fees” into what is ALREADY A MONOPOLY and should be run for the worlds benefit. This is a clear way for VeriSign to try and destroy .com domains (as they are today) by introducing something radically new and different, when in reality VeriSign should be a STEWARD to the extension, not extortionist about how it operates the extension. The fact that VeriSign has made this proposal is just another sign that the .Com contract should be put out for public tender, and not given a blind presumptive right of renewal to a greedy, for profit corporation.

    Possibly we should look at replacing VeriSign with blockchain. The time is upon us. When the world gets smarter, cheaper and more technological, VeriSign is only trying to pad its pockets deeper.

    NO TO PREMIUM RENEWALS ON .COM DOMAINS!!!!!!! VeriSign already makes more than $1 billion a year for operating a monopoly. Do not let this greedy company SNEAK premium renewals into .com domains!!!! This is the worst idea ever!

  5. Don Smith says:

    Has anyone looked into the details of this proposal?

    VeriSign said:
    “The .com domain name registry operates an unrestricted, unsponsored top-level domain and thus, any Internet user anywhere in the world may participate in the auction and compete to register the SCDN in the .com TLD.”

    This statement is not entirely true. First of all, you have to be an extremely wealthy individual or a corporation to afford the estimated $15m + plus price tag. So this auction is only limited to the 0.01% of the world’s population.

    VeriSign said:
    “The third party auction service provider will be required to pre-qualify potential registrants for participation in the auction, which may include asking potential registrants to submit documentation to the third party auction service provider describing the planned marketing and usage of the registered domain name, demonstrating the ability to pay, and additional requirements as may be required by the third party auction service provider. A team formed by the third party auction service provider will review and approve the proposals based upon pre-determined qualifications.”

    The above excerpt suggest this is a restricted auction. Entrance into the auction will be based on pre-determined qualifications. It also says that the auction service provider may have additional requirements for participation. Thus, this is a RESTRICTED auction.

    Furthermore, what is the point of asking potential auction participants the question on “planned marketing and usage” of the domain name? Why does this question have any bearing on if someone can participate in the auction or not?

    What are the other “additional requirements” in order to participate?

    VeriSign may operate the unrestricted .COM namespace – but nothing about this action is “unrestricted.” This is the first BIG move that allows VeriSign to do things differently, and this is not good.

    VeriSign said:
    “Verisign will likely include industry standard disclaimers (e.g., disclaimer of all warranties with respect to the data) in the
    agreement(s) governing the proposed service.”

    Thus, auction participants will have to agree to an additional set of standard disclaimers outside of the current unrestricted terms of the .COM namespace, – but they are not being disclosed in this proposal. This is concerning! The proposal suggests a new set of restrictions will be placed on .com domain names.

    Bottom line – nothing about this proposed auction is unrestricted. And this gives serious concerns to anti-competition and monopoly laws in the United States and abuse of market power.

  6. Don Smith says:

    The US Government has price caps on .COM domain names. VeriSign is contractually obligated to follow these pricing caps. When you auction off a domain name (say for $15 million dollars) – this is MASSIVELY in excess of the $7.85 price point. This $15 million price tag gives you the right to register the domain for an initial 5-year term.

    Assume this auction closes at $15,000,000. The breakdown is as follows:
    Year 1 – $3,000,000
    Year 2 – $3,000,000
    Year 3 – $3,000,000
    Year 4 – $3,000,000
    Year 5 – $3,000,000

    Sure, VeriSign may argue that the auction proceeds are sperate from the registration fees – but both fees are tied together and mean the same thing. You are paying money for registration rights for a .com domain name (in this case, the $15 million upfront allows you to register domain for a 5-year period.)

    To further explain my point, let’s consider the renewal provisions. If the 5.0% renewal fee ($750,000) paid in years 6 – 25 is not rendered by the due date, the domain registration will be cancelled by VeriSign. By associating the renewal fees to the auction proceeds, VeriSign has basically introduced a $750,000 premium renewal price on a domain name. If you don’t pay $750,000 in any given year, VeriSign has the “right to terminate the registration and the domain will enter the standard Redemption Grace Period.” This is well outside of the scope of the existing .COM contract and this gives rise to very serious anti-competition and anti-trust concerns. Under no circumstance should VeriSign be allowed to terminate a domain name registration!!!!

    VeriSign is attempting to monopolize the release of single character domain names. VeriSign is proposing a plan that is anti-competitive, which would effectively not allow anybody else to release single character .COM names and determine where the estimated $330,000,000 in proceeds will land. VeriSign has a fiduciary responsibility to offer registration and renewal prices at the mandated prices forced upon itself by the Department of Justice – which is $7.85 each.

  7. Rubens Kuhl says:

    There is an unbalance between the registration fee of a domain and its market value; exploiting that difference is arbitrage.

    As happened with 2012 TLDs, domainers don’t like when someone else gets that difference, but they would still do the same in the same position.

    While the money seems high, it doesn’t really make much of a difference on Verisign financial performance. OTOH, organisations that buy domains for millions of dollars will likely spend even more to advertise it and deploy it in many use cases. That’s the real value of it, and that’s why giving to charity is part of the package.

    Sure VRSN will try getting the money for the other letters to itself, but it will make sense for them even if all single letters .com go to charity.

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