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Verisign says Afilias tried to “rig” $135 million .web auction

Kevin Murphy, December 17, 2018, Domain Services

Verisign has jumped back into the fight for the .web gTLD, all guns blazing, with a claim that Afilias offered millions in an attempt to “rig” a private auction for the string.

The .com behemoth accused Afilias last week of “collusive and anti-competitive efforts to rig the [.web] auction in its favor”.

It claims that Afilias offered rival bidder — and secret Verisign stooge — Nu Dot Co up to $17 million if it would participate in a private auction, and then tried to contact NDC during the auction’s “Blackout Period”.

The claims came in an amicus brief (pdf) filed by Verisign as part of Afilias’ Independent Review Process proceeding against ICANN.

The IRP is Afilias’ attempt to overturn the result of the July 2016 .web auction, in which NDC paid ICANN $135 million of Verisign’s money in exchange for the exclusive rights to .web

While neither Verisign nor NDC are parties to the IRP, they’re both attempting to become amicus curiae — “friends of the court” — giving them the right to provide evidence and arguments to the IRP panel.

Verisign argues that its rights would be seriously impacted by the proceeding — Afilias is looking for an emergency ruling preventing .web being delegated — because it won’t be able to bring .web to market.

But it’s also attempting to have the IRP thrown out altogether, on the basis of claims that Afilias broke the auction rules and has “unclean hands”.

Verisign’s brief states:

Afilias and other bidders proposed that a private auction be performed pursuant to collusive and potentially illegal terms about who could win and who would lose the auction, including guarantees of auction proceeds to certain losers of the auction.

NDC CFO Jose Rasco provides as evidence screenshots (pdf) of a text-message conversation he had with Afilias VP of sales Steve Heflin on June 7, 2016, in which Heflin attempts to persuade NDC to go to a private auction.

Every other member of the contention set at that point had agreed to a private auction, in which the winning bid would be shared out among the losers.

NDC was refusing to play along, because it had long ago secretly agreed to bid on behalf of Verisign, and was forcing a last-resort ICANN auction in which ICANN would receive the full sum of the winning bid. 

In that SMS conversation, Heflin says: “Can’t give up…how about I guarantee you score at least 16 mil if you go to private auction and lose?” followed by three money-bag emojis that I refuse to quote here on general principle.

Rasco responds with an offer to sell Afilias the .health gTLD, then just weeks away from launch, for $25 million.

Heflin ignores the offer and ups his .web offer to $17.02 million.

Given that it was a contention set of seven applicants, that suggests Afilias reckoned .web was going to sell for at least $100 million.

Verisign claims: “Afilias’s offers to ‘guarantee’ the amount of a payment to NDC as a losing bidder are an explicit offer to pay off NDC to not compete with Afilias in bidding on .web.”

Rasco also provides evidence that Schlund, another .web applicant, attempted to persuade NDC to join what it called an “Alternative Private Auction”.

This process would have divided bidders into “strong” and “weak” categories, with “strong” losing bidders walking away with a greater portion of the winning bid than the “weak” ones.

Verisign and NDC also claims that Afilias broke ICANN’s auction rules when VP John Kane texted Rasco to say: “If ICANN delays the auction next week would you again consider a private auction?”

That text was received July 22, four days before the auction and one day into the so-called “Blackout Period”, during which ICANN auction rules (pdf)  prohibit bidders from “cooperating or collaborating” with each other.

At that time, .web applicants Schlund and Radix already suspected Verisign was bankrolling NDC, and they were trying to get the auction delayed.

According to Verisign, Kane’s text means Afilias violated the Blackout rules and therefore it should lose its .web application entirely.  

The fact that these rules proscribe “collaborating” during the Blackout suggests that collaborating at other times was actually envisaged, which in turn suggests that Heflin’s texts may not be as naughty as Verisign claims.

Anyway, I think it’s fair to say the gloves, were they ever on, have come off.

Weighing in at over 1,000 pages, the combined amicus briefs and attached exhibits reveal some interesting additional facts that I don’t believe were in the public domain before now and may be worth noting here.

The Verisign filing reveals, I believe for the first time, that the final Verisign bid for .web was $142 million. It only paid $135 million because that was runner-up Afilias’ final bid.

It also reveals that Verisign and NDC signed their “executory agreement” — basically, NDC’s promise to sign over .web if Verisign bankrolled its bid — in August 2015, nearly a year before the auction took place. NDC evidently kept its secret for a long time before rivals got suspicious.

The IRP panelist is scheduled to rule on Afilias’ request for a “stay of all ICANN actions that further the delegation of the .WEB gTLD” on January 28.

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Exclusive gang of 10 to work on making ICANN the Whois gatekeeper

Kevin Murphy, December 14, 2018, Domain Services

Ten people have been picked to work on a system that would see ICANN act as the gatekeeper for private Whois data.

The organization today announced the composition of what it’s calling the Technical Study Group on Access to Non-Public Registration Data, or TSG-RD.

As the name suggests, the group is tasked with designing a system that would see ICANN act as a centralized access point for Whois data that, in the GDPR era, is otherwise redacted from public view.

ICANN said such a system:

would place ICANN in the position of determining whether a third-party’s query for non-public registration data ought to be approved to proceed. If approved, ICANN would ask the appropriate registry or registrar to provide the requested data to ICANN, which in turn would provide it to the third party. If ICANN does not approve the request, the query would be denied. 

There’s no current ICANN policy saying that the organization should take on this role, but it’s one possible output of the current Expedited Policy Development Process on Whois, which is focusing on how to bring ICANN policy into compliance with GDPR.

The new group is not going to make the rules governing who can access private Whois data, it’s just to create the technical framework, using RDAP, that could be used to implement such rules.

The idea has been discussed for several months now, with varying degrees of support from contracted parties and the intellectual property community.

Registries and registrars have cautiously welcomed the notion of a central ICANN gateway for Whois data, because they think it might make ICANN the sole “data controller” under GDPR, reducing their own legal liability.

IP interests of course leap to support any idea that they think will give them access to data GDPR has denied them.

The new group, which is not a formal policy-making body in the usual ICANN framework, was hand-picked by Afilias CTO Ram Mohan, at the request of ICANN CEO Goran Marby.

As it’s a technical group, the IP crowd and other stakeholders don’t get a look-in. It’s geeks all the way down. Eight of the 10 are based in North America, the other two in the UK. All are male. A non-zero quantity of them have beards.

  • Benedict Addis, Registrar Of Last Resort.
  • Gavin Brown, CentralNic.
  • Jorge Cano, NIC Mexico.
  • Steve Crocker, former ICANN chair.
  • Scott Hollenbeck, Verisign.
  • Jody Kolker, GoDaddy.
  • Murray Kucherawy, Facebook.
  • Andy Newton, ARIN.
  • Tomofumi Okubo, DigiCert.

While the group is not open to all-comers, it’s not going to be secretive either. Its mailing list is available for public perusal here, and its archived teleconferences, which are due to happen for an hour every Tuesday, can be found here. The first meeting happened this week.

Unlike regular ICANN work, the new group hopes to get its work wrapped up fairly quickly, perhaps even producing an initial spec at the ICANN 64 meeting in Kobe, Japan, next March.

For ICANN, that’s Ludicrous Speed.

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Governments blast ICANN over Amazon gTLDs

Kevin Murphy, December 14, 2018, Domain Services

ICANN seems to have found itself in the center of a diplomatic crisis, after eight South American governments strongly denied they approve of Amazon being given the .amazon gTLD.

The Amazon Cooperation Treaty Organization, along with the government of Brazil, blasted ICANN CEO Goran Marby for multiple alleged “untrue, misleading, unfortunate and biased statements”, in a December 7 letter  (pdf) published yesterday.

ACTO claims that ICANN was “premature” and “ill-informed” when its board of directors un-rejected Amazon’s gTLD applications in an October resolution.

In bruising terms, the letter goes on to criticize Marby for failing to set up promised talks between ACTO and Amazon and then characterizing “informal” conversations with Brazil’s Governmental Advisory Committee rep as if they represented ACTO’s collective view.

It’s just about as harsh a critique of ICANN management by governments I’ve read.

Amazon, the retailer, has been trying to get .amazon, along with transliterations in Chinese and Japanese scripts, since 2012.

Its applications were rejected — technically, placed in “Will Not Proceed” status — after GAC advice in July 2013. The advice was full-consensus, the strongest type, after the lone holdout, the United States, at the time trying to win support for the IANA transition, bowed out.

The advice came because the ACTO countries believe “Amazon” is a geographic string that belongs to them.

But Amazon filed an Independent Review Process appeal with ICANN, which it won last year.

The IRP panel declared that the GAC advice was built on shaky, opaque foundations and that the committee should not have a blanket “veto” over new gTLD applications.

ICANN has ever since been trying to figure out a way to comply with the IRP ruling while at the same time appeasing the GAC and the ACTO countries.

The GAC gave it a little wriggle room a year ago when it issued advice that ICANN should “continue facilitating negotiations between the [ACTO] member states and the Amazon corporation”.

ICANN took this to mean that its earlier advice to reject the bids had been superseded, and set about trying to get Amazon and ACTO to come to an agreement.

Amazon, for its part, has offered ACTO nations a suite of cultural protections, an offer to support future applications for .amazonia or similar, and $5 million worth of products and services, including free Kindle devices.

It has also offered to bake a collection of Public Interest Commitments — these have never been published — into its registry contract, which would enable ACTO governments to bring compliance actions against the company in future. 

That proposal was made in February, and ICANN has supposed to have been facilitating talks ever since.

According to a timeline provided by Marby, in a November letter (pdf) to ACTO secretary general Jacqueline Mendoza, ICANN has been working in this facilitation role since November 2017.

Problem is, at almost every step of the way it’s been dealing with Brazilian GAC rep Benedicto Filho, rather than with Mendoza herself, apparently on the assumption that when he made noises favorable to the Amazon proposal he was speaking for ACTO. 

And that’s not the case, according to Mendoza and Filho, in the newly published letters.

Whatever input Filho had was in the context of “informal and general conversations in which it was repeatedly and clearly indicated that no country had any mandate to negotiate on behalf of the other members of ACTO”, Mendoza wrote.

Filho himself goes on to accuse Marby of several “gross misrepresentation[s]” and “flagrant inaccuracies”, in an increasingly strident set of three emails forward by Mendoza to Marby.

He claims that he informed Marby every step of the way that he was not authorized to speak on behalf of ACTO, and that the idea he was involved in “obscure and secret negotiations” is “offensive”.

It seems that either one or both men is bullshitting about the extent to which Filho represented himself as an ACTO rep, or there has been a genuine breakdown of communication. For want of any definitive evidence, it seems fair to give them both the benefit of the doubt for now.

The situation as it stands now is that ACTO has called off planned peace talks with Amazon, facilitated by Marby, and has filed a Request for Reconsideration in an attempt to overturn the ICANN board’s October resolution.

Mendoza says ACTO will not engage in talks concerning .amazon until this request has been processed. 

So the fate of .amazon now lies with ICANN’s Board Accountability Mechanisms Committee, which is responsible for rejecting processing reconsideration requests. The test is usually whether the requester has brought new information to light that was not available when the board made its decision.

BAMC can either figure out a way to accept the request and put .amazon back in its “Will Not Proceed” status, smoothing out the path to negotiations (re)opening but placing Amazon back in indefinite limbo, or it can reject it and risk ACTO walking away completely.

It’s a tricky spot to be in, and no mistake.

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No more free transfers in Denmark

Kevin Murphy, December 12, 2018, Domain Services

The Danish ccTLD registry has announced that it is to introduce a charge for .dk transfers for the first time in January.

From the start of 2019, transfers between registrants will cost DKK 50 (about $7.50), DK Hostmaster said today.

Currently, transfers are free.

It appears that the new fee will be levied on the gaining registrant.

DK Hostmaster said that the fee is to cover “administrative costs”.

.dk has about 1.3 million domains under management.

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ICANN outs two more deadbeat new gTLDs

Kevin Murphy, December 12, 2018, Domain Services

ICANN has published breach notices it has sent to two more new gTLD registries, which it says have failed to pay their quarterly accreditation fees.

One is a dot-brand, the other is not.

The brand is the Arabic اتصالات . (.xn--mgbaakc7dvf), managed by Emirati telecommunications powerhouse Etisalat.

With about $14 billion of annual revenue, no domains other than its obligatory NIC site, and an allegedly non-functioning contact phone number, it appears the UAE-based company may simply have forgotten its dot-brand exists.

The other registry allegedly in breach is Desi Networks, the US-based company that targets .desi at people hailing from the Indian subcontinent.

While it’s been on the market for over four years, and has an addressable market of over a billion people, .desi has failed to claw together much more than 3,700 domains under management.

I thought it would have performed better. The ccTLD for India has over two million domains, and the country has a thriving domain market.

With a retail price in the region of $20 per year, it’s easy to see why the .desi may be having trouble scraping together the $6,250 quarterly flat fee ICANN registry contracts demand.

Desi Networks also commits on its web site to donate some portion of its reg fees to worthy causes in the South Asian region, which was probably optimistic with hindsight.

ICANN first sent notices of late payment to both registries in September, but did not receive the requested money.

Both have until the first week of January to pay up, or ICANN will initiate termination proceedings.

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