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ICANN director slammed vertical integration

Kevin Murphy, December 15, 2010, 18:16:03 (UTC), Domain Registries

ICANN really shook up the domain name industry last month when it said it was dropping rules that prevent registrars and registries from owning each other.

But two of its directors voted against the decision and one, George Sadowsky, entered a lengthy dissenting opinion in which he said the benefits of so-called “vertical integration” are “largely illusory”.

Vertical integration would allow existing registrars to apply to run new top-level domains. It would enable companies to more easily apply for “.brand” or small niche TLDs.

This has been banned in previous registry contracts, due in part to the potential for abuse of registry data and anti-competitive behaviour by registrars.

Sadowsky delivered a four-point objection to the VI resolution, which was passed in early November, according to minutes published this week.

He said that introducing VI at the same time as the new TLD program would create unpredictable and irreversible consequences for the industry, and questioned ICANN’s ability to enforce compliance with data-sharing rules.

in spite of the measures to be taken to ensure “good conduct,” the resolution has the potential to commingle all of the data, public and private, regarding a registry in one place, providing the possibility of easy and invisible sharing of data within a merged or co-owned entity regardless of the scope of any agreement with ICANN.

Such sharing is likely to be undetectable given the close affiliations among the entities. Data now forbidden to be shared between registries and registrars will be shared. Both auditing and enforcement by ICANN are unlikely to be effective, all the more so as we move from 20+ to hundreds of new gTLDs.

Data sharing would give registrars greater insight into valuable domains, potentially facilitating registrant-unfriendly activities such as warehousing.

Those companies which opposed VI, including Afilias and Go Daddy, have previously said that the potential for registrar abuse, harming registrars, was too great.

Sadowsky said:

Assuming that each gTLD registry must continue to treat all registrars equally, the real benefits of vertical integration are largely illusory, but those that can be easily obtained by the officially forbidden sharing of data are real

The minutes also show that Mike Silber voted against the resolution, saying he “believes there will be very unpleasant, unintended consequences”.

Harald Alvestrand, Ram Mohan, Thomas Narten, Jonne Soininen and Bruce Tonkin had conflicts of interest and were not in the room for the debate. The two voting directors, Tonkin and Alvestrand, officially abstained from the vote.

The minutes also contain this mysterious entry:

Confidential Issue
Pursuant to Article V, Section 5.4 of the ICANN Bylaws, the Board of Directors, by unanimous vote, determimed that, to protect the interests of ICANN, the matter under discussion should not be included in the minutes until such time as the Board designated the item should be published.

Anybody with any ideas what this might be, please feel free to theorize in the comments.

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Comments (1)

  1. gpmgroup says:

    “It would enable companies to more easily apply for “.brand” or small niche TLDs.”

    Even a technology company like Google uses Domain Registrars – Like MarkMonitor to manage their names. How many companies are going to consider running their own Registry business which is much more of an undertaking than an in house Registrar?

    —–

    Also the irony isn’t lost that some of the strongest advocates of VI would not even exist in their current form if it were not for VS which allowed them entry!

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