ICANN ended its fiscal 2016 with just shy of $400 million on its balance sheet, according to its just-released financial report.
As of June 30, the organization had assets of $399.6 million, up from $376.5 million a year earlier, the statement (pdf) says.
Its revenue for the year was actually down, at $194.6 million in 2016 compared to $216.8 million in 2015.
That dip was almost entirely due to less money coming in via “last-resort” new gTLD auctions.
The growth of the gTLD business led to $74.5 million coming from registries, up from $59 million in 2015.
Registrar revenue grew from $39.3 million to $48.3 million.
Money from ccTLD registries, whose contributions are entirely voluntary, was down to $1.1 million from $2.1 million.
Expenses were up across the board, from $143 million to $131 million, largely due to $5 million increases in personnel and professional services costs.
The results do not take into account the $135 million Verisign paid for .web, which happened after the end of the fiscal year.
Auction proceeds are earmarked for some yet-unspecified community purpose and sit outside its general working capital pool. Regardless, they’re factored into these audited financial reports.
ICANN has to date taken in almost a quarter of a billion dollars from auctions. Its board recently decided to diversify how the money is invested, so the pot could well grow.
Four US states attorneys general have quietly thrown in the towel in their attempt to have the IANA transition blocked.
The AGs of Texas, Nevada, Arizona and Oklahoma unilaterally dropped their Texas lawsuit against the US government on Friday, court records show.
A filing (pdf) signed by all four reads simply:
Plaintiffs hereby provide notice that they are voluntarily dismissing this action pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i).
That basically means the case is over.
The AGs had sued the US National Telecommunications and Information Administration, seeking an eleventh-hour restraining order preventing the IANA transition going ahead.
The TRO demand was comprehensively rejected, after ICANN and organizations representing numerous big-name technology companies let their support for the transition be known in court.
The plaintiffs had said they were considering their options, but now appear to have abandoned the case.
It was widely believed that the suit was politically motivated, an attempt by four Republican officials to stir up anti-Obama sentiment in the run-up to the US presidential election.
The ICANN community and United Nations agencies are heading for a clash, with governments accused this morning of trying to bypass the ICANN policy-making process.
According to the leader of an ICANN volunteer working group, governments and UN-affilated intergovernmental organizations (IGOs) have circumvented the usual ICANN consensus-building process in order to extract the policies they want directly from the ICANN board of directors and staff.
It’s the first time since the IANA transition, which happened less than a week ago, that governments have been accused of exploiting their special access to the board, and it may become a hot topic at next month’s ICANN 57 meeting in India.
Governments and UN agencies now stand accused of “bypassing the ICANN community” in order to achieve their policy goals.
But the policy being debated is not directly linked to the IANA transition, nor to the thoroughly debunked notion that the UN has taken over ICANN.
Indeed, the issue in question — the permanent protection of IGO acronyms in gTLDs — is almost embarrassingly narrow and predates the announcement of the IANA transition by at least three years, going back to at least 2011.
Basically, the policy questions that look set to cause even more conflict between governments and others are: should IGO acronyms be protected, and if so, how?
IGO acronyms are strings such as WIPO, UNESCO and OECD.
The ICANN board punted this question in May 2014, when it received conflicting advice from the Governmental Advisory Committee and Generic Names Supporting Organization.
Since then, a GNSO Policy Development Process working group has been working on recommendations. It has not yet issued its initial findings, but is close.
Simultaneously and separately, members of ICANN’s board and staff have been quietly talking to a handful of GAC members and IGOs about the same issue in what has become known as the “small group”.
Because it’s small. And a group.
Yesterday, ICANN divulged the consensus of the small group in a letter (pdf) to the leaders of the GNSO Council.
Its recommendations conflict in almost every respect with what the GNSO working group intends to recommend.
The small group wants ICANN to create IGOs-acronyms-only versions of the Trademark Clearinghouse database, Trademark Claims service and UDRP and URS dispute resolution mechanisms — basically “functionally equivalent” mirrors of almost all of the rights protection mechanisms currently only available to trademark owners.
They would be administered at least partially by the GAC and at no cost to the IGOs themselves (presumably meaning ICANN would pick up the tab).
It seems like a disproportionate amount of faff considering the problem ICANN is trying to solve is the vanishingly small possibility that somebody attempts to cybersquat the United Nations Entity For Gender Equality And The Empowerment Of Women (UNWOMEN) or the Postal Union Of The Americas Spain And Portugal (PUASP).
A lot of it is also in direct opposition to what the GNSO WG plans to recommend, according to chair Phil Corwin and the current draft of the WG’s recommendations.
The WG currently plans to recommend that IGOs should be allowed to use the existing URS and UDRP mechanisms to take down or take over domains that use their acronyms in bad faith. It does not currently seem to recommend anything related to Trademark Claims.
A foundational disagreement relates to the status of IGOs under the law. While IGOs in the small group seem to think they are in a special category of entity that is not subject to regular trademark law, the WG hired expert legal counsel that determined the contrary.
Corwin, in his initial response to the small group letter, said that the implications of the debate go beyond how IGO acronyms should be protected.
IGOs carried out a “near boycott” of the GNSO PDP discussions, he wrote, preferring instead to talk to the small group “behind closed doors”. He wrote:
we continually urged members of the GAC, and IGOs, to participate in our WG. That participation was so sporadic that it amounted to a near-boycott, and when IGO representatives did provide any input they stressed that they were speaking solely as individuals and were not providing the official views of the organizations that employed them.
Of course, why should they participate in the GNSO policy processes when they are permitted to pursue their goals in extended closed door discussions with the Board, and when the Board seeks no input from the GNSO in the course of those talks?
He directly linked the timing of the small group report to the expiration last Friday of ICANN’s IANA functions contract with the US Department of Commerce, and suggested that the IGO acronym issue could be a litmus test for how ICANN and governments function together under the new oversight regime.
I note that transmission of the letter has been delayed until after the completion of the IANA transition, and that the post-transition role of governments within ICANN was a central controversy surrounding the transition.
What is at stake in this matter goes far beyond the relatively rare instance in which a domain registrant infringes upon the name or acronym of an IGO and the IGO seeks relief through a CRP [Curative Rights Protection mechanism]. The larger issue is whether, in a post-transition ICANN, the GAC and the UN agencies that comprise a large portion of IGOs, will participate meaningfully in GNSO policy activities, or will seek their policy aims by bypassing the ICANN community and engaging in direct, closed door discussions with the Board.
The financial effects of this seemingly interminable debate on the gTLD industry are probably pretty minor.
Currently, all new gTLDs have temporarily blocked, from launch, all of the IGO acronyms in question. That’s roughly 200 domains per gTLD that could otherwise be sold.
Many of the strings are three, four and five-letter acronyms that could fetch “premium” prices in the open market (though, in my judgement, not much more than a couple hundreds bucks in most cases).
A small number of the acronyms, such as WHO and IDEA, are potentially more valuable.
Off the top of my head and the back of an envelope, I’d put the cost to the industry as a whole of the IGO acronym blocks probably somewhere in the very low millions.
The harms being prevented are also very minor, in my view. With a small handful of exceptions, the IGOs in question are not attractive cybersquatting targets.
But, as is so often the case in ICANN matters, the arguments in this case boil down to matters of law, principle and process much more than practical impact.
A Texas judge refused demands for a temporary restraining order preventing the IANA transition going ahead last weekend because the suing state attorneys general were unlikely to succeed at trial.
That was one of several reasons Judge George Hanks refused the TRO, which had been requested by the Republican AGs of Texas, Arizona, Oklahoma and Nevada.
Hanks’ order on the motion, which was published last night (pdf), said the AGs:
have not shown that there is a substantial likelihood that they will prevail on the merits of this case. Nor have they shown that there is a substantial threat that an irreparable injury will be suffered. Nor have they shown that the threated injury outweighs the threatened harm to the United States. Finally, they have not shown that granting the injunction will not disserve the public interest.
The lawsuit claims that the IANA transition, which involves the US government removing itself from its oversight roles of ICANN and DNS root zone management, represents a threat to free speech and to the stability of the .mil and .gov TLDs.
The eleventh-hour complaint was filed on Thursday, after attempts by Senator Ted Cruz and his allies to block the transition via a Congressional funding bill failed.
But Hanks ruled that the AGs claims about potential future harms amounted to no more than “speculation” and “hearsay”.
He wrote: “counsel’s statements of what ‘might’ or ‘could’ happen are insufficient to support the extraordinary relief sought in this case.”
He also pointed to one significant logical inconsistency in their argument:
Even if the Court were to find that some past harm or bad acts by the Internet Corporation for Assigned Names and Numbers (“ICANN”) impacted the interests of the States in their respective websites and alleged rights at interest, the Court notes that these past harms happened under the exact regulatory and oversight scheme that the States now seek to preserve. This, along with the lack of evidence regarding any predictable or substantially likely events, greatly undermines the States’ request for they relief they seek.
The AGs are reportedly considering their options following the ruling, and may appeal.
But another school of thought holds that the suit was largely a political gesture designed to creating talking points for the Republican party ahead of next month’s presidential election, and could be allowed to fade away.
Here’s the judge’s decision (pdf)
Larry Strickling, assistant secretary at the National Telecommunications and Information Administration, released the following brief statement early October 1:
The federal court in Galveston, Texas denied the plaintiffs’ application for declaratory and injunctive relief. As of October 1, 2016, the IANA functions contract has expired.
The US had been sued at the eleventh hour by four state attorneys general, who claimed that allowing ICANN to go independent would, among other things, put free speech at risk.
The judge evidently disagreed, though his full decision has not yet been made available.
ICANN chair Steve Crocker released this statement:
This transition was envisioned 18 years ago, yet it was the tireless work of the global Internet community, which drafted the final proposal, that made this a reality. This community validated the multistakeholder model of Internet governance. It has shown that a governance model defined by the inclusion of all voices, including business, academics, technical experts, civil society, governments and many others is the best way to assure that the Internet of tomorrow remains as free, open and accessible as the Internet of today.
Akram Atallah, president of ICANN’s Global Domains Division, tweeted this:
— Akram Atallah (@AkramAtallah) September 30, 2016
The transition, in broad terms, means the US no longer holds a special role in managing the DNS root.
Now, instead of having to rely on vague threats from the NTIA to keep ICANN in line, the global internet community will get new powers to challenge ICANN decisions.