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Verisign says it needs .web because .com is running out of names

Kevin Murphy, April 14, 2021, Domain Registries

Verisign’s affinity for cognitive dissonance has emerged yet again — it’s now claiming that it needs to be awarded the .web gTLD because it’s running out of .com domains to sell.

In legal documents released by ICANN yesterday, Verisign’s lawyers say: “The undisputed evidence is that Verisign needs a TLD like .WEB for growth given the decreased name availability in .COM”.

The admission/claim/lie (delete according to preference) came in a joint post-hearing filing by Verisign and Nu Dot Co, the .web applicant to which Verisign loaned $135 million to bid for the gTLD on its behalf at a record-breaking ICANN auction in 2016.

Afilias, now owned by Donuts, was the second-highest bidder and since November 2018 has been trying to get the auction result cancelled via ICANN’s quasi-judicial Independent Review Process.

The IRP’s final hearing was held over seven days last June, and we’ve been waiting with baited breath for a ruling ever since.

At some point over the last 48 hours, ICANN published three sets of post-hearing arguments — one from itself, one from complainant Afilias and an amicus (non-party, friend of the court) filing from Verisign/NDC.

The Verisign filing (pdf) attempts to rubbish Afilias’ claims across the board, but its rebuttal of the argument that it only wants .web in order to bury it and protect .com’s dominance is particularly interesting:

Verisign Has Every Incentive To Grow .WEB Aggressively. Afilias’ Amended IRP Request asserts without evidence that Verisign seeks to acquire .WEB in order to eliminate a potential competitor for .COM and that Afilias would make a better operator of .WEB. Afilias presented no evidence to support this claim prior to the IRP, and none was presented at the hearing. In fact, the evidence before this Panel refutes Afilias’ claims. The undisputed evidence is that Verisign needs a TLD like .WEB for growth given the decreased name availability in .COM. Even Afilias’ own experts concede that the .COM TLD now has limited name availability. Moreover, the undisputed evidence establishes that Verisign is well-positioned to maximize .WEB’s potential, while Afilias’ recent track record suggests that it would be a less effective operator of .WEB.

In June last year, Verisign had submitted to the IRP panel:

Verisign needs a new TLD like .WEB for growth. Verisign’s growth rate has declined in recent years, largely due to many names in .COM already having been taken and increased competition from new gTLDs and ccTLDs that have superior name availability.

Even Afilias’ own experts concede that the .COM name space effectively is taken. Numerous other industry participants have noted that most of the “good” names in .COM already are taken.

While Verisign had a applied for a few non-English transliterations of .com in the 2012 new gTLD application round, it had avoided getting involved with potential competitors to .com.

But, according to its brief, in 2014 it had just sold off the remainder of its non-domain businesses and, realizing its growth now needed to come from a pure domains strategy, tasked VP Paul Livesay with figuring out how it could worm its way back into the new gTLD program.

Many of the details of Livesay’s research and decision making have been redacted by ICANN (purportedly at Verisign’s request), but it seems he came to the conclusion that the best way to benefit from the program long after the application window closed would be to secretly financially back NDC’s participation in the .web auction, with the provision that the .web contract would be transferred to Verisign should it win.

Quite apart from its regular postings touting .com availability over the last few years, the same year that Verisign was coming to the conclusion that .com was becoming saturated and it needed new growth opportunities in other TLDs, it sued XYZ.com for false advertising for having the gall to suggest that it was hard to find available .com domains. It lost.

Because Verisign apparently enjoys nothing more than holding two diametrically opposed positions simultaneously, its October amicus filing also claims that .web isn’t nearly as awesome as Afilias and others claim.

On the same page that it insists that .web is needed to drive growth, Verisign poo-poos the notion that .web could be a significant competitor to .com, relying on an “expert report” commissioned by Verisign and compiled by University of Chicago economist Kevin Murphy.

(Murphy’s report is redacted in its entirety (pdf) by ICANN, but his 1,119 pages of unredacted exhibits (pdf) prominently include screenshots from this blog, so I feel the need to point out that he’s a different Kevin Murphy — he’s not me, and I’d never even heard of the dude until this morning. On a personal level, the fact that I’m apparently not even the best Kevin Murphy when it comes to the .web story that I’ve been covering for the last two decades is, as you might imagine, as depressing to me as it is presumably amusing to you.)

While his report is redacted, reading around the edges it appears that Murphy reckons .web will not be an exceptional competitor to .com.

Verisign’s October filing states:

.WEB’s Valuation Shows It is Not Particularly Competitively Significant. The Murphy Report models multiple economic scenarios to assess Afilias’ claim that the $135 million price paid for .WEB at the public auction shows that .WEB will be a substantial competitor. None of these scenarios indicate that .WEB is likely to gain a significant market share. Instead, each scenario shows that .WEB is likely to have no more than a 2–3% market share.

Because of the redactions, it’s not clear what market Murphy was referring to, but a 3% market share of the current universe of domain names across all TLDs works out to over 10 million domains. In other words, .web could be a top-five gTLD, up alongside the likes of .org.

But elsewhere in its IRP filings, Verisign cites Murphy to support its argument that .web will have “registrations in the low single digit millions”. That would still be enough to make it one of the best-selling new gTLDs.

This relatively low expected turnout of course begs the question of why Verisign needs .web to grow. It added 4 million net new names across .com and .net last year alone, with .net pretty static, according to its financial filings.

I’m no Kevin Murphy, but here’s a table I’ve thrown together showing Verisign’s domain growth over the last decade.

EOYTotal .com/.net domains (millions)
2010105.2
2011113.8
2012121.1
2013127.2
2014130.6
2015139.8
2016142.2
2017146.4
2018153
2019158.8
2020165.2

Its revenue has consistently grown year over year, from $681 million in 2010 to $1.27 billion in 2020. It’s considered one of the most profitable companies in the world, and its share price has tripled since 2011.

And that was without .web.

Anger as Nominet rejects coup’s pick for chair

Kevin Murphy, April 13, 2021, Domain Registries

.uk registry Nominet has rejected its members’ favorite for chair of the board, causing no small amount of irritation among those who backed last month’s boardroom coup.

Company acting chair Rob Binns yesterday told members that Sir Michael Lyons, who headed a review of Nominet a few years ago, will not be asked to be chair, after they failed to reach agreement on terms.

The company has posted an application form (pdf) for would-be chairs.

It seems Lyons was only looking for a short-term gig to help transition Nominet to a new operating model in line with the demands of the PublicBenefit.uk campaign, but Nominet wanted a commitment of at least three years.

Binns wrote (pdf) to members:

After much careful consideration, the Board has decided not to invite Sir Michael to be acting Chair. There was much in common between the current path the board is committed to, and Sir Michael’s view. However, the Board wants and needs a long-term Chair appointment to steer the company’s future and that did not align with Sir Michael’s conditions. We did explore a non-executive director seat but it was clear Sir Michael did not want such a role.

Binns had previously informed members their pick for deputy chair, Axel Pawlik, had also declined a consulting role at the registry.

Lyons and Pawlik had been put forward, with their cooperation, as replacement directors in last month’s Emergency General Meeting, which saw chair Mark Wood and three other directors fired by a slim majority of member votes.

CEO Russell Haworth resigned from both his executive and board roles shortly before the EGM rather that face the vote.

While PublicBenefit’s effort to slash the board almost in half was successful, a second motion to install Lyons and Pawlik did not make it to the agenda, with Nominet’s previous leadership claiming it broke company rules on member-selected directors.

Both Lyons and Pawlik signed a letter to Nominet yesterday expressing disappointment that they failed to come to an agreement and dripping with grim foreshadowing of future member action.

It (pdf) reads a little like a preemptive told-you-so.

We do not believe that you are currently in a strong enough position to begin recruiting new board members or a new CEO. Both require clarity about future mission and stability.

From the very beginning of our discussions, I have consistently underlined my concern to avoid a continuing period of uncertainty or to inherit a divided board, trying to fight the battles of the past. I wish you well with the task you have taken on.

The PublicBenefit campaign, spearheaded by Simon Blackler of the registrar Krystal Hosting, wants Nominet to eschew the diversification of its recent years under Haworth and return to its domain name registry roots, with lower wholesale prices and more money returned to public benefit causes.

The remaining board, under Binns and now supplemented by two newly appointed members of Nominet’s executive suite, has put forward a plan that addresses some of the campaign’s concerns, but many members do not believe quite enough humble pie has been eaten yet.

Members were angered last week when head of registry Eleanor Bradley, one of the ousted directors, was made interim CEO, a move one member today described as “taking the piss”.

Today, most of the member sentiment on social media has been critical of Nominet’s post-EGM choices, with rumblings of a second EGM to finish off the job.

But there was some appreciation that Nominet has been heavily engaging in discussions on Twitter today, which marks a switch from the pre-EGM hands-off approach to member engagement.

The company will hold a members-only meeting on Friday morning to discuss its plan for the future and, unlike the EGM, listen-only passes for the media appear to be available.

Ahead of GoDaddy acquisition, MMX to scrap premium fees on 725,000 domains

Kevin Murphy, April 12, 2021, Domain Registries

MMX plans to remove hundreds of thousands of domains from its premium list later this month, and reduce prices on a hundred thousand more.

Dubbed The Great Release, the April 23 adjustment will see 725,400 names currently reserved at premium prices released to the available pool at the usual wholesale fee for their respective gTLDs.

Another 102,000 names will keep a premium ticket, but will see their price reduced. MMX says it’s wiped $145 million from the list price of a total of 827,000 names.

The names are available in 26 of MMX’s portfolio of new gTLDs, which GoDaddy currently intends to buy for $120 million.

An MMX spokesperson said that the current pricing had been in place since 2014 and was up for review. He said:

Premium pricing is not something that had been looked at in great detail since it launched its TLDs, and MMX felt that its pricing was out of step with current market trends. MMX also saw that it had held back much of its inventory without ever releasing it, and following a large volume of enquiries over the last 12 months, MMX decided to release all reserved names to get them into the hands of users.

A searchable database of releasing names can be found here, but you’ll need to hand over your email address to access it.

ICANN threatens to seize gTLD after Whois downtime

Kevin Murphy, April 12, 2021, Domain Registries

Are we about to see our next gTLD registry implosion?

ICANN has whacked the company behind .gdn with a breach notice and a threat that it may seize the TLD, after its Whois systems allegedly suffered days of downtime.

According to ICANN, .gdn exceeded its weekly and monthly downtime limits in late March and early April, in both months triggering the threshold whereby ICANN is allowed to transition the TLD to an Emergency Back-End Registry Operator.

gTLD registries are allowed to have 864 minutes (about 14 hours) of unplanned Whois downtime per month. Downtime exceeding 24 hours per week is enough to trigger ICANN’s EBERO powers.

It appears to be the third time .gdn’s Whois has gone on the blink for longer than the permitted period — ICANN says it happened in April 2018 and August 2019 too. Those incidents were not publicized.

It seems the Russian registry, Joint Stock Company “Navigation-information systems”, managed to fix the problem on April 2, and ICANN is not invoking the EBERO transition, something it has done just a couple times before, just yet.

But it does want NIS to present it with a plan showing how it intends to avoid another spell of excessive downtime in future. It has until May 8, or ICANN may escalate.

.gdn is by most measures a bullshit TLD.

While it was originally intended to address some kind of satellite navigation niche, it eventually launched as a pure generic with the backronym “Global Domain Name” in 2016.

It managed to rack up over 300,000 registrations in the space of a year, almost all via disgraced and now-defunct registrar AlpNames, and was highlighted by SpamHaus as being one of the most spam-friendly of the new gTLDs.

After AlpNames went out of business two years ago, ICANN transferred some 350,000 .gdn names to CentralNic-owned registrar Key-Systems.

Today, Key-Systems has fewer than 300 .gdn domains. The TLD’s zone file dropped by about 290,000 domains in a single day last December.

.gdn had fewer than 11,000 domains under management at the end of 2020, 90% of which were registered through a Dubai-based registrar called Intracom Middle East FZE.

Intracom pretty much only sells .gdn domains, suggesting an affiliation with the registry.

Web searches for live sites using .gdn return not much more than what looks like porn spam.

A busted Whois looks like the least of its problems, to be honest.

China could block GoDaddy’s $120 million MMX swoop

GoDaddy’s proposed $120 million acquisition of essentially all the meaningful assets of portfolio gTLD player MMX will be subject to Chinese government approval, it emerged this morning.

Following GoDaddy’s bare-bones press release announcing the deal last night, this morning MMX added a whole bunch of flesh, including a list of closing conditions, in its statement to shareholders.

GoDaddy is proposing to buy essentially MMX’s entire operating business — the 28 gTLD registry agreements with ICANN, including the four porn-related strings belonging to subsidiary ICM Registry.

Not only do MMX shareholders have to approve the deal — and holders of 64% of the shares have already promised they will — but ICANN approval will be required for the registry contracts to be reassigned.

This may prove a hurdle or delay if third parties raise competition concerns, but ICANN’s pretty opaque approval process generally doesn’t frown too much on industry consolidation.

Another known unknown is China.

MMX told shareholders that it needs: “Approval of Chinese authorities for the change of control of MMX China (including change of control in respect of relevant licenses held by MMX China permitting it to distribute TLDs in China).”

The reason for this is quite straightforward: in volume terms, quite a lot of MMX’s business has been in China in recent years. Popular sellers such as .vip, with over 800,000 names today, have been driven primarily by Chinese investors.

A local presence (in this case MMX China) and approval from the Ministry of Industry and Information Technology is required to legally sell a TLD to Chinese registrants via Chinese registrars.

I’ve no particular reason to believe MIIT will withhold its approval for MMX China to move into GoDaddy’s ownership, but a failure to get the nod from China appears to be a deal-breaker.

MMX’s statement to the markets this morning also provided some clarity on what exactly it is that GoDaddy is proposing to buy.

The gTLDs to be acquired are: .vip,.nrw, .casa, .vodka, .xxx, .fit, .miami, .fishing, .porn, .beer, .surf, .boston, .adult, .yoga, .garden, .abogado, .work, .fashion, .horse, .rodeo, .sex, .wedding, .luxe, .dds, .law, .bayern, .cooking, and .country.

It seems that when Tony Farrow took over as MMX CEO last year, after his predecessor left due to an accounting snafu, he had the portfolio audited and came to the conclusion that it could expect only pretty crappy growth over the coming years.

It had banked on selling expensive defensive trademark blocks in its four porn-themed gTLDs to big brands to make up the shortfall, but then GoDaddy approached in December brandishing its rather large checkbook.

MMX reckons the deal values the company at a 92% premium over its closing share price Tuesday, and 87% and 78% premiums over its 20-day and 90-day average selling price.

.bayern, .nrw and the four porn gTLDs belong to subsidiaries that GoDaddy will acquire outright, but GoDaddy is not proposing to buy MMX itself.

Rather, MMX will likely stay alive and publicly traded long enough to redistribute its cash windfall to investors and sell or wind down about a dozen non-operating subsidiaries.

It has a transition services agreement to manage certain business functions of the registry until January next year, which sounds a bit like what fellow GoDaddy acquisition .CLUB Domains explained to me last night.

After that, London’s Alternative Investment Market rules will treat MMX as a “cash shell”, and it will either have to acquire an operating business from somewhere or make itself the subject of a reverse takeover by a company looking for a quick way to the public markets.

.CLUB CEO on selling to GoDaddy, Clubhouse, and .club’s “twerking moment”

.CLUB Domains CEO Colin Campbell says he’s planning to continue to promote the .club gTLD long after its acquisition by GoDaddy Registry, announced earlier today, closes.

The deal was one of several announced last night by GoDaddy, the highlight being the $120 million purchase of MMX’s portfolio of 28 gTLD contracts.

While the price of the .club deal was not disclosed, Campbell confirmed that it’s a contract reassignment rather than a purchase of the company. He’s not expecting any ICANN regulatory friction, pointing out that .club is relatively small fry in the grand scheme of things.

But .club is arguably one of the success stories of the new gTLD program.

It currently stands at over a million domains under management, recently boosted by the launch of the third-party audio conferencing app Clubhouse, which has driven demand.

“I think Clubhouse was the twerking moment for .club,” Campbell said. “It’s the moment everyone realized — holy shit this is the best domain on the market to start a community, to start a club.”

“Our volume of premium domains went up 700% in January,” he said. “We exploded.”

I understand a “twerking moment” to be a nodal point in a business’s performance so sensational that one feels obliged to stand up at one’s desk and “twerk“. I’d rather not think about it too much, to be honest.

Campbell said the volume decline .club was experiencing prior to Clubhouse launching — its zone file shrank by 200,000 names in 2020 — is misleading as a metric of measuring growth.

“We’ve always been growing,” he said. “What we’ve been doing the last few years is raising prices for the first year, so our quality of registrations is higher now than it’s ever been. Volume’s a joke… what we’re talking about is real registrations, real users. It’s all about usage.”

He was ambivalent on whether the GoDaddy deal would have happened without the Clubhouse boost.

“.club was growing very fast with real usage,” he said. “Clubhouse had nothing to do with this — in my opinion — but who knows, you’d have to ask GoDaddy.”

It seems .CLUB Domains the company will wind up eventually, but Campbell said it will continue to promote the TLD even after the deal closes in a few months.

“I will never stop supporting .club, this is part of my DNA,” Campbell said. Pressed, he said that the company will continue to operate until at least the end of the year.

But why sell his baby? Campbell said “.club was never for sale”, so it appears GoDaddy reached out to .CLUB first. But Campbell sees GoDaddy as a safe pair of hands.

“The people that run GoDaddy Registry are Nicolai [Bezsonoff], and Lori Anne [Wardi], who were the co-founders of .co and they’ve done a good job of promoting .co and I really believe that can promote .club in a similar way,” Campbell said.

GoDaddy buys 30 new gTLDs for over $120 million

GoDaddy Registry has just announced it is acquiring 28 new gTLDs from rival MMX, along with the TLDs .club and .design.

The MMX deal is worth at least $120 million; the value of the other two deals was not disclosed.

GoDaddy is also taking over the back-ends for .rugby and .basketball, which had been contracted to MMX, and said it has won the back-end deal for the dot-brand, .ally.

It’s the most significant pieces of registry consolidation since Donuts and Afilias hooked up in December.

GoDaddy Registry will wind up being the contract holder or back-end for over 240 TLDs, with over 14 million domains under management, the company said.

It’s not entirely clear which gTLDs GoDaddy is acquiring right now, but it appears to be all of those listed on the MMX web site.

It’s currently listed by IANA as the sponsor for 21 gTLDs: .cooking, .fishing, .horse, .miami, .rodeo, .vodka, .beer, .luxe, .surf, .nrw, .work, .budapest, .casa, .abogado, .wedding, .yoga, .fashion, .garden, .fit, .vip and .dds.

MMX subsidiary ICM Registry runs .xxx, .porn, .adult and .sex, not an easy fit with the family-friendly image GoDaddy has attempted to cultivate in recent years.

MMX also manages geographic gTLDs .boston, .london and .bayern on behalf of their respective local governments.

The company hinted in January that it was considering selling off some of its under-performing registries, after a crappy 2020 that saw it forced to restate revenues, lay off staff and can its top executives.

MMX, which is publicly traded in London, has yet to make a statement on the deal but we should no doubt expect something in the morning before the markets open.

The deal appears to be bad news for Nominet, which runs the back-end for most MMX gTLDs. GoDaddy will very likely migrate them over to its own platform eventually.

MMX aside, GoDaddy is also buying .club from .CLUB Domains, according to its press release.

.CLUB is a bit of a rarity — a single-string new gTLD registry that done really rather well for itself without tarnishing its brand by becoming synonymous with cheap domains and spam.

.design, the other GoDaddy acquisition today, is run by Top Level Design, which also runs .ink, .wiki and .gay.

.design has over 120,000 domains in its zone file today, while .club has over 1 million. Both have been on a growth trajectory recently.

GoDaddy also said as part of the same announcement that it has signed Ally Financial’s dot-brand business for .ally, but as Ally was already a client of Neustar (which GoDaddy owns) I’m not entirely sure what it’s getting excited about.

Nominet members wail as ousted director made CEO

Nominet has been accused of being “tone deaf” to its members’ criticisms after it appointed two staffers to its board of directors and named a recently ousted director as interim CEO.

The .uk registry told members last week that Eleanor Bradley will occupy the corner office “for approximately 6 months” while a permanent replacement for Russel Haworth is sought.

Haworth quit last month rather than face the wrath of members at an Extraordinary General Meeting that shortly thereafter voted to remove Bradley and three other directors from the board.

Bradley has been with the company for many years and was head of registry at Nominet, and seems like an obvious pick for an internal appointment, but members took to social media to express their displeasure.

The EGM was held after a campaign to round up the votes at PublicBenefit.uk, organized by Simon Blackler of Krystal Hosting. Members had hoped to install Sir Michael Lyons and Axel Pawlik on the board as chair and deputy chair.

But Nominet said that its bylaws would not allow directors to be selected this way, and there was no vote on that motion.

Instead, after the vote, relatively new director Rob Binns has taken the acting chair’s job and CIO Adam Leach and company secretary Rory Kelly joined the board from staff.

Binns informed the members of the appointments in a letter March 31 (pdf), which also said that Pawlik has been offered a consulting gig but had declined.

While eating a generous slice of humble pie, assuring members that the EGM was “an opportunity to reset and begin rebuilding the relationship between membership and Nominet”, the plan for the company he outlined was not a million miles away from the plan Nominet had put forward to address members’ concerns under its previous management.

Crucially, Nominet is still backing its non-core security business, which many members believe is an unnecessary diversification that diverted focus from the registry and profits from public benefit causes.

Binns said: “We believe those capabilities are integral to the public benefit we provide, so we want to develop a refreshed structure that protects that capability while addressing members’ desire for Nominet to focus more on its core activities.”

He also backed plans for a Registry Advisory Council, which would have seats for members, and said Nominet will bring back its web-based member discussion forum, which was closed down last year.

His letter contains no mention of reducing prices, one of the five big asks the PublicBenefit.uk campaign made.

Most of the social media reaction to Binns’ letter was negative. Notably, Richard Kirkendall, CEO of Namecheap, one of the largest registrars to publicly expressed its support for the campaign, tweeted:

Others had similar points of view, and some speculated that a second EGM may be required to set Nominet on the path the majority of its members appear to want.

XYZ adds .tickets to its gTLD stable

XYZ.com has taken over the ICANN registry agreement for the gTLD .tickets, according to records.

It looks to be the registry’s 23rd TLD, the latest of XYZ’s acquisitions of unused or floundering new gTLDs.

In the case of .tickets, it’s picking up a low-volume, high-price TLD with some rather onerous registration restrictions.

The TLD was originally set up by UK-based Accent Media to provide a space where people going to music, theater and sporting events, for examples, could buy tickets in the assurance that the sellers were legit.

Would-be .tickets registrants have a five-day waiting period before their domains go live, while the registry manually verifies their identities from paper records such as passports or driving licenses.

That high-friction reg process is one reason the shelf price for a .tickets domain is well over $500 a year.

It’s also a reason why very few .tickets domains have been sold. The registry peaked at fewer than 1,200 names in its zone file in 2018 and has been on the decline ever since.

It had 769 names in its zone at the end of March this year.

Registry reports show that the majority of its names are registered via brand-protection registrars and are likely unused. Searches for active .tickets sites return fewer than 100 results.

XYZ might be able to turn this around by smoothing out the reg friction and lowering the price.

But even just 1,000 names at $500 a year could be considered a nice little earner as part of a portfolio with low overheads from economies of scale. XYZ already runs even higher-priced, lower-volume zones such as .cars and .auto.

EFF rages as Ethos closes Donuts buy

The Electronic Frontier Foundation thinks the acquisition of Donuts by “secretive” private equity group Ethos Capital represents a risk to free speech.

The deal, which sees Ethos buy a controlling stake from fellow PE firm Abry Partners, closed earlier this week, having apparently received no official objection from ICANN.

But the EFF now wants ICANN to force Donuts to change its gTLD registry contracts to make it harder for the company to engage in what it calls “censorship-for-profit”.

The group’s senior staff attorney, Mitch Stoltz, raised the issued at the Public Forum session of last week’s ICANN 70 virtual public meeting, and expanded upon his thinking in a blog post this week. He wrote:

Donuts already has questionable practices when it comes to safeguarding its users’ speech rights. Its contracts with ICANN contain unusual provisions that give Donuts an unreviewable and effectively unlimited right to suspend domain names—causing websites and other internet services to disappear.

He pointed to Donuts’ trusted notifier program with the Motion Picture Association, which streamlines the takedown of domains used for pirating movies, as an example of a registry’s power to censor.

Donuts runs gTLDs including ones with social benefit meanings that the EFF is particularly concerned about, such as .charity, .community, .fund, .healthcare, .news, and .university.

Stoltz also makes reference to the Domain Protected Marks List, a Donuts service that enables trademark owners to block their marks, and variants, across its entire portfolio of 240+ gTLDs.

In effect, this lets trademark holders “own” words and prevent others from using them as domain names, even in top-level domains that have nothing to do with the products or services for which a trademark is used. It’s a legal entitlement that isn’t part of any country’s trademark law, and it was considered and rejected by ICANN’s multistakeholder policy-making community.

The DPML is not unique to Donuts. Competitors such as UNR and MMX have similar services on the market for their gTLDs.

When Stoltz raised the EFF’s concerns at last week’s ICANN meeting, CEO Göran Marby basically shrugged them off, saying he didn’t understand why one PE firm buying an asset off another PE firm was such a big deal.

I have to say I agree with him.

Ethos came under a lot of scrutiny last year when it tried to buy .org manager Public Interest Registry, turning it into a for-profit entity, generating cash for Ethos’ still-undisclosed backers.

(This week, Ethos disclosed in a press release that its investors include massive hedge funds The Baupost Group and Neuberger Berman “among others”, which appears to be the first time these names have been mentioned in connection with the company).

But a pretty good case could be made that .org is a unique case, that has had a non-profit motive baked into its DNA for decades. That does not apply to Donuts, which was a profit-making venture from the outset.

It’s not entirely clear why the EFF is suddenly concerned that Donuts will start exercise its contractual right-to-suspend more frequently under Ethos than under Abry. Stoltz wrote:

As we learned last year during the fight for .ORG, Ethos expects to deliver high returns to its investors while preserving its ability to change the rules for domain name registrants, potentially in harmful ways. Ethos refused meaningful dialogue with domain name users, instead proposing an illusion of public oversight and promoting it with a slick public relations campaign. And private equity investors have a sordid record of buying up vital institutions like hospitals, burdening them with debt, and leaving them financially shaky or even insolvent.

Even with the acquisition passing through ICANN easily, the EFF wants Donuts to change its contracts to make it more difficult for the company to suspend domain names on a whim.

I believe the language causing the controversy comes from anti-abuse policies in the Public Interest Commitments found in almost all Donuts’ contracts with ICANN, which state in part:

Registry Operator reserves the right, at its sole discretion and at any time and without limitation, to deny, suspend, cancel, or transfer any registration or transaction, or place any domain name(s) on registry lock, hold, or similar status as it determines necessary for any of the following reasons:

a. to protect the integrity and stability of the registry;

b. to comply with any applicable laws, government rules or requirements, requests of law enforcement, or any dispute resolution process;

c. to comply with the terms of this Registry Agreement and the Registry Operator’s Anti-Abuse Policy;

d. registrant fails to keep Whois information accurate and up-to-date;

d. domain name use violates the Registry Operator’s acceptable use policies, or a third party’s rights or acceptable use policies, including but not limited to the infringement of any copyright or trademark; or

e. as needed during resolution of a dispute.

As a voluntary PIC, this language is unique to Donuts, though other registries have similar provisions in their registry agreements.