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XYZ says it won’t block censored Chinese domains

Kevin Murphy, November 6, 2015, Domain Registries

New gTLD registry XYZ.com has said it will not preemptively censor domain names based on the wishes of the Chinese government.

Over the last couple of days, CEO Daniel Negari has sought to “clarify” its plans to block and suspend domain names based on Chinese government requests.

It follows XYZ’s Registry Services Evaluation Request for a gateway service in the country, first reported by DI and subsequently picked up by the Electronic Frontier Foundation, a Wall Street Journal columnist, Fortune magazine and others.

The clarifications offered up by XYZ probably did more to confuse matters.

A blog post on Wednesday said that XYZ will not reserve any .xyz domain names from being registered, except those ICANN makes all new gTLD registries reserve.

Subsequent comments from Negari stated that XYZ will, as the RSEP stated, prevent names that have been banned in China from being registered.

However, there’s one significant difference.

Now, the registry is saying that it will only put those bans in place for domain names that have been specifically banned by the Chinese government when the name had already been registered by a Chinese registrant.

So, if I understand correctly, it would not preemptively ban anyone anywhere from registering [banned term].xyz.

However, if [banned term].xyz was registered to a Chinese resident and the Chinese government told the registry to suspend it, it would be suspended and nobody would be able to re-register it anywhere in the world.

Negari said in a blog comment yesterday:

if we receive a Chinese legal order tomorrow (before the gateway has launched) which requires disabling a domain name registered in China and properly under Chinese jurisdiction, then it will be disabled at the registry level, and not by the gateway. When the gateway launches the name will continue to be unavailable, and the gateway will not implement the action on a localized basis only in China. The normal registry system would continue to be the only system used to resolve the name globally. Again — the specific stability concern ICANN had was that we would use the Chinese gateway to make .xyz names resolve differently, depending on what country you are in. I completely agree that our [RSEP] re-draft to address that concern came out in a way that can be read in a way that we sincerely did not intend.

So there is a list of preemptively banned .xyz, .college, .rent, .security and .protection domains, compiled by XYZ from individual Chinese government requests targeting names registered to Chinese registrants.

Negari said in an email to DI yesterday:

To clarify the statement “XYZ will reserve domains,” we meant that XYZ will takedown domains in order to comply with “applicable law.” Unfortunately, the inaccuracies in your post caused people to believe that we were allowing the Chinese government to control what names could be registered or how they could be used by people outside of China. The idea that XYZ is going to impose Chinese law and prevent people outside of China from registering certain domain names is simply incorrect and not true. To be 100% clear, there is no “banned list.”

That was the first time anyone connected with XYZ had complained about the October 12 post, other than since-deleted tweets that corrected the size of the list from 40,000 domains to 12,000.

The RSEP (pdf) that causes all this kerfuffle has not been amended. It still says:

XYZ will reserve names prohibited for registration by the Chinese government at the registry level internationally, so the Gateway itself will not need to be used to block the registration of of any names. Therefore, a registrant in China will be able to register the same domain names as anyone else in the world.

This fairly unambiguous statement is what XYZ says was “misinterpreted” by DI (and everyone else who read it).

However, it’s not just a couple of sentences taken out of context. The context also suggests preemptive banning of domains.

The very next sentence states:

When the Gateway is initially implemented we will not run into a problem whereby a Chinese registrant has already registered a name prohibited for registration by the Chinese government because Chinese registrars are already enforcing a prohibition on the registration of names that are in violation of Chinese law.

This states that Chinese residents are already being preemptively banned, by Chinese registrars, from registering domains deemed illegal in China.

The next few paragraphs of the RSEP deal with post-registration scenarios of domains being banned, clearly delineated from the paragraph dealing with pre-registration scenarios.

In his blog post, Negari said the RSEP “addressed the proactive abuse mitigation we will take to shut down phishing, pharming, malware, and other abuse in China”.

I can’t believe this is true. The consequence would be that if China sent XYZ a take-down notice about a malware or phishing site registered to a non-Chinese registrant, XYZ would simply ignore it.

Regardless, the takeaway today is that XYZ is now saying that it will not ban a domain before it has been registered, unless that domain has previously been registered by a Chinese resident and subsequently specifically banned by the Chinese government.

The registry says this is no different to how it would treat take-down notices issued by, for example, a US court. It’s part of its contractual obligation to abide by “applicable law”, it says.

Whether this is a policy U-turn or a case of an erroneous RSEP being submitted… frankly I don’t want to get into that debate.

Disclosure: during the course of researching this story, I registered .xyz domains matching (as far as this monoglot can tell) the Chinese words for “democracy”, “human rights”, “porn” and possibly “Tiananmen Square”. I have no idea if they have value and have no plans to develop them into web sites.

Now Uniregistry shifts to Early Access launch model

Kevin Murphy, October 28, 2015, Domain Registries

Uniregistry has become the latest registry to adopt the Early Access Period model for some new gTLD launches.

.cars, .car and .auto will all use the EAP, in place of the more typical landrush period, when they launch in January.

Technically, while Uniregistry is running the back-end, the three gTLDS are all being offered by Cars Registry, a partnership between Uniregistry and .xyz registry XYZ.com.

Uniregistry CEO Frank Schilling said it was felt that EAP was needed due to the “stupendous cost” of acquiring the strings.

EAP is a period lasting usually about a week in which the price of registering any domain descends daily from a very high fee on day one — usually above $10,000 at the storefront — to maybe a hundred bucks when the period closes.

The model was pioneered by portfolio registries Donuts and Rightside, but has since been adopted by the likes of Minds + Machines, Radix and XYZ.com.

It’s rapidly becoming the de facto industry standard for new gTLD launches, replacing the auction-based approach to landrush most registries have used in the past.

The driving factor for the industry switch is surely revenue.

Donuts told us late last month that it had sold 48,381 EAP domains across all of its launches to date, where registry prices are believed to start at around the $10,000 mark.

M+M said yesterday that it sold $1.18 million after it chose to use EAP with its recently launched .law gTLD, where registration restrictions suggest many of the sales will have been to legit end users.

Registrars also get a bigger slice of the pie. In an auction model they might wind up with just the regular registration fee, but with EAP they can mark up day one domains by thousands of dollars.

Cars Registry says its EAP is targeted at “OEMs, dealerships, vendors”, but it will almost certainly get a healthy chunk of domainer interest too.

Verisign’s silly .xyz lawsuit thrown out

Kevin Murphy, October 28, 2015, Domain Registries

Verisign has had its false advertising lawsuit against the .xyz gTLD registry thrown out of court.

XYZ.com this week won a summary judgement, ahead of a trial that was due to start next Monday.

“By granting XYZ a victory on summary judgement, the court found that XYZ won the case as a matter of law because there were no triable issues for a jury,” the company said in a statement.

The judge’s ruling does not go into details about the court’s rationale. XYZ’s motion to dismiss has also not been published.

So it’s difficult to know for sure exactly why the case has been thrown out.

Verisign sued in December, claiming XYZ and CEO Daniel Negari had lied in advertising and media interviews by saying there are no good .com domain names left.

Many of its claims centered on this video:

XYZ said its ads were merely hyperbolic “puffery” rather than lies.

Verisign also claimed that XYZ had massively inflated its purported registration numbers by making a shady $3 million reciprocal domains-for-advertising deal with Network Solutions.

XYZ general counsel Grant Carpenter said in a statement: “These tactics appear to be part of a coordinated anti-competitive scheme by Verisign to stunt competition and maintain its competitive advantage in the industry.”

While Verisign has lost the case, it could be seen to have succeeded in some respects.

XYZ had to pay legal fees in “the seven-figure range”, as well as disclose hundreds of internal company documents — including emails between Negari and me — during the discovery phase.

Through discovery, Verisign has obtained unprecedented insight into how its newest large competitor conducts its business.

While I’ve always thought the lawsuit was silly, I’m now a little disappointed that more details about the XYZ-NetSol deal are now unlikely to emerge in court.

XYZ to put global block on domains banned in China

Kevin Murphy, October 12, 2015, Domain Registries

XYZ.com plans to slap a global ban on domain names censored by the Chinese government.

Chinese words meaning things such as “human rights” and “democracy” are believed to be on the block list, which an industry source says could contain as many as 40,000 words, names and phrases.

(UPDATE: Gavin Brown, CTO of XYZ back-end CentralNic, tweeted that the list is nowhere near 40,000 names long.)

The registry seems to be planning to allow the Chinese government to censor its new gTLDs, which include .xyz, .college, .rent, .protection and .security, in every country of the world.

And it might not be the last non-Chinese registry to implement such a ban.

The surprising revelation came in a fresh Registry Services Evaluation Process request (pdf), filed with ICANN on Friday.

The RSEP asks ICANN to approve the use of a gateway service on the Chinese mainland, which the company says it needs in order to comply with Chinese law.

As previously reported, Chinese citizens are allowed to register domains in non-Chinese registries, but they may not activate them unless the registry complies with the law.

That law requires the registry to be located on the Chinese mainland. XYZ plans to comply by hiring local player ZDNS to proxy its EPP systems and mirror its Whois.

But the Chinese government also bans certain strings — which I gather are mostly but not exclusively in Chinese script — from being registered in domain names.

Rather than block them at the ZDNS proxy, where only Chinese users would be affected, XYZ has decided to ban them internationally.

Registrants in North America or Europe, for example, will not be able to register domains that are banned in China. XYZ said in its RSEP:

XYZ will reserve names prohibited for registration by the Chinese government at the registry level internationally, so the Gateway itself will not need to be used to block the registration of of any names. Therefore, a registrant in China will be able to register the same domain names as anyone else in the world.

It seems that XYZ plans to keep its banned domain list updated as China adds more strings to its own list, which I gather it does regularly.

Customers outside of China who have already registered banned domains will not be affected, XYZ says.

If China subsequently bans more strings, international customers who already own matching domains will also not be affected, it says.

CEO Daniel Negari told DI: “To be clear, we will not be taking action against names registered outside of China based on Chinese government requests.”

But Chinese registrants do face the prospect losing their domains, if China subsequently bans the words and XYZ receives a complaint from Chinese authorities.

“We treat requests from the Chinese government just like we treat requests from the US government or any other government,” Negari said.

“When we receive a valid government or court order to take action against a name and the government has jurisdiction over the registration, we will take action the registration,” he said.

Up to a third of the .xyz zone — about three hundred thousand names — is believed to be owned by Chinese registrants who are currently unable to actually use their names.

The company clearly has compelling business reasons to comply with Chinese law.

But is giving the Chinese government the ongoing right to ban tens of thousands of domain names internationally a step too far?

ICANN allows anyone to file public comments on RSEP requests. I expect we’ll see a few this time.

XYZ to rethink China gateway plans

Kevin Murphy, September 16, 2015, Domain Registries

XYZ.com has withdrawn its request to start selling .xyz and .college domains into China via a local gateway service provider.

The company has said it will amend and resubmit its plan to ICANN, which had told it the idea “might raise significant Stability or Security issues”.

The registry wants to be one of the first non-Chinese registries to be able to comply with government regulations, which require all domain firms to have an official license.

As we reported last week, it had signed up with local registrar ZDNS, which would proxy for registrations made by Chinese registrants.

However, it has now withdrawn its Registry Services Evaluation Process request after ICANN said it would have to refer it up the chain to a special technical committee for review.

XYZ said in a letter to ICANN:

We are withdrawing this request because our gateway model is changed since the submission of the registry request and so the request is no longer accurate. We will shortly submit a new registry request to cover the updated gateway model.

It’s not clear what the specific “security and stability” concerns were.

Retail sales see CentralNic over double revenue

Kevin Murphy, September 16, 2015, Domain Registries

CentralNic saw a huge 171% increase in revenue and a tripling of billings in the first half of the year, based on its newly acquired retail business and the sale of premium names.

For the six months to the end of June, the London-based firm saw revenue of £4.4 million ($6.8 million) compared to £1.6 million ($2.5 million) a year earlier.

It moved into profit during the period, netting £287,000 ($442,000) after tax compared to a loss of £599,000 in the 2014 period.

CentralNic broke down its numbers into segments, showing that its new business areas were responsible for most of the growth, while the core registry business was relatively slow.

Registry was up 13% to £1.6 million ($2.5 million).

The new registrar business, which is lead by its $7.5 million Internet.bs acquisition, leaped from £180,000 to £1.8 million (£2.8 million), while its premium name sales business was £1.1 million compared to a negligible £50,000 a year earlier.

The company noted in a statement that Google was the first “megabrand” to use a .xyz domain name and expressed optimism that this may increase awareness of new gTLDs in future.

CentralNic is the second-largest new gTLD back-end, as measured by registration volume, largely due to its .xyz contract.

It also acts as back-end for .online, which left the blocks very quickly earlier this month, racking up over 57,000 names so far.

XYZ fighting red tape to serve Chinese customers

Kevin Murphy, September 8, 2015, Domain Registries

XYZ.com is trying to become one of the first non-Chinese gTLD registries to be able to sell unhindered into the Chinese market, in the face of Draconian government regulations.

The company has filed a Registry Services Evaluation Process request with ICANN — the first of its kind — that would let it use a gateway service, based in China, to comply with strict local laws on registries, registrars and registrants.

The Ministry of Industry and Information Technology regulations have been in place for a decade, but it’s only in the last year or so, in light of the new gTLD program, that China has been strictly enforcing them.

Anyone in China can buy a domain, but you need a license if you want to put up a web site, according to Gavin Brown, CTO of .xyz back-end CentralNic. Registrants also need to have their Whois information verified and validated, he said.

The problem for Chinese residents today is if they buy a domain in a TLD that is not licensed by the government, they won’t be able to obtain a license to host a web site on that domain.

The .xyz gTLD is believed to have a few hundred thousand domains registered via Chinese registrars, a substantial portion of its total.

There’s a worry that China could demand the deletion of these names and others, as it has previously in .cn, if the proper licenses have not been obtained.

Naturally, the inability to use these domains has led to a lot of pissed-off registrants. XYZ says has been receiving complaints from its registrars in the country, which in turn have been receiving complaints from their customers.

XYZ proposes to fix the problem by using a gateway service provided by ZDNS, a DNS provider based in mainland China.

Registrars in the country would maintain a separate EPP connection to ZDNS, which would act as a proxy to CentralNic’s UK-based primary EPP system.

ZDNS, which is prominently promoting its gateway service on its web site, would handle the Whois verification and also proxy the .xyz Whois lookup service, but only as it pertains to Chinese registrants and queries originating in China.

Data on non-Chinese registrants would continue to be housed with CentralNic.

ZDNS would also prevent Chinese registrants registering domains containing strings that have been banned by the government.

XYZ’s RSEP request (pdf) is currently undergoing its technical/competition review with ICANN. Assuming it passes, it would be exposed to public comment before being approved.

The RSEP states: “we are confident that the entire Internet user base of China would endorse this service and that Chinese registrars would strongly endorse this service.”

It’s the first such request to ICANN, suggesting that an awful lot of gTLDs are still not compliant with the Chinese regulations.

As of April, only 14 TLDs — all managed by China-based companies — were licensed to operate in China.

Reddit peppers Go Daddy boss with sexism questions

Kevin Murphy, September 4, 2015, Domain Registrars

Go Daddy can’t seem to shake off the legacy of its long-running, sexually suggestive TV advertising.

In an “Ask Me Anything” session on Reddit yesterday, CEO Blake Irving seemed to face more questions about sexism, women in technology and equal opportunities hiring than any other topic.

He made about 70 posts during the session, at least 10 of which related to Go Daddy’s relationship with the equally-fair sex in some way. Some Reddit users wondered aloud whether some such questions had been planted by Go Daddy sock-puppets.

The “best”-rated question on the thread addressed the company’s old TV commercials, which in the early days regularly featured scantily-clad, large-breasted women. Irving said:

The old ads helped GoDaddy build massive brand awareness in the US. They weren’t helpful to our reputation as an egalitarian provider of services though, and they didn’t do enough to tell people what we actually do. One of the first things I did at GoDaddy was pivot the advertising to reflect what we did and who we did it for. When 58% of small businesses in the US are run by women you should reflect the great work they do as small businesses. That’s what we’ve done with our ads over the past two years.

Irving joined Go Daddy in December 2012. Its ads since then have focused less and less on the prurient interest.

Irving also pointed out in one answer than a third of the company’s executive team is female.

He was also asked a number of questions about the new .ski gTLD (he was wearing a branded baseball cap in the AMA’s accompanying photograph).

Go Daddy employees also seemed to be out in force, asking multiple questions about this year’s corporate Christmas party.

When asked about the prospects for new gTLDs versus .com, Irving sat on the fence:

We’re seeing steady increases in awareness and the first instances of big global brands using the names (like abc.xyz and brand TLDs like home.barclays). We expect this to continue to drive new gTLD sales over time. For the foreseeable future, COM will likely remain the most desired name in the US and outside. It’s universally recognizable around the world. Either way, our goal is to provide the best choices available for each customer and the new gTLDs make getting the perfect name for you much more likely.

When asked “Does your burning evil raise your body temperature?”, Iriving replied:

Ummmm …. GoDaddy is an eco-conscious company, so we are firmly against practices that are harmful to the environment, including the use of malevolent forces as a fuel source. But, I do like a good bike ride to get my heart pumping.

The whole AMA can be read here.

Radix targets a million .online names in 2-3 years

Kevin Murphy, August 27, 2015, Domain Registries

Having just finished the most-successful new gTLD launch day to date, Radix Registry reckons it can get .online to seven figures in two to three years.

“We’re at 37,170 names as of an hour ago,” Radix CEO Bhavin Turakhia told DI at about 1000 UTC this morning.

That represents less than a full day of general availability. The company said last night that 28,000 names were registered in the first 30 minutes.

UPDATE: At the 24-hour mark, Radix tweeted this:

That beats .club’s 25,000-ish, which was Radix’s publicly stated goal, but it also tops .berlin’s 31,000 first-day names.

The CEOs of both these rival registries had publicly predicted their positions would be toppled and actively encouraged Radix to claim the crown.

Turakhia said that the majority of names registered came from pre-orders, largely at 1&1.

“Fourteen thousand names came from 1&1, 6,000 from Go Daddy, 2,700 from United Domains, 1,900 from Name.com and 1,400 from Tucows,” he said, partially breaking down the 37,170 figure by registrar.

He said the goal is to have a .online zone measured in the millions of names.

“I estimate that we should be able to get to a million names in a period of two to three years,” he said. “That’s on a conservative basis.”

Depending on how you count domains, .xyz may have already been the first to hit one million. Its zone never got as high as a million names, but it may have briefly crossed a million in terms of domains under management earlier this year.

At auction, .online sold for what is believed to be an eight-figure sum, originally to a joint venture of Radix, Tucows and Namecheap.

Radix bought out its partners earlier this year.

That was an increase in risk exposure Radix business head Sandeep Ramchandani said made him nervous. He said launch day’s numbers show .online’s potential.

Turahkhia said that there are 680,000 names in the .com zone that end in “online” today, and a million that have “online” somewhere in the second level, showing that the string is desirable to registrants.

Radix said last night that its Early Access Period — during which names are sold for a higher price — ended with 1,130 sales.

Turahkhia said that of these, about 1,000 were registered in the last three days, during which time the price was $100. Regular .online pricing is around the same as .com ($14.99 at 1&1 and Go Daddy), but some registrars are selling for as much at $50.

Did XYZ.com pay NetSol $3m to bloat .xyz?

Kevin Murphy, August 25, 2015, Domain Registries

Evidence of a possibly dodgy deal between XYZ.com and Network Solutions has emerged.

Court documents filed last week by Verisign suggest that the .xyz registry may have purchased $3 million in advertising in exchange for $3 million of .xyz domain names.

Verisign, which is suing .xyz and CEO Daniel Negari over its allegedly “false” advertising, submitted to the court a list of hundreds of exhibits (pdf) that it proposes to use at trial.

Among them are these two:

  • Email from Negari to Andrew Gorrin re EPP Feed and billing directly for $3,000,000 in domains
  • Credit Memo to Andrew from Negari “We have elected to pay for our $3MM Q2 advertising insertion order, which was dated May 20th with a credit…….” (5/31/14)

Gorrin is Web.com’s senior VP of marketing and Negari is Daniel Negari, XYZ.com’s CEO.

The documents these headings refer to are not public information, and are not likely to be any time soon, but they appear to refer to on the one hand XYZ billing NetSol for $3 million in domain names and on the other NetSol billing XYZ for $3 million in advertising.

Only one of the two document headings is dated, so we don’t know how closely they coincided.

Other headings, among the 446 documents Verisign wants to use at trial, suggest that they happened at pretty much the same time:

  • Email from Andrew Gorrin to Ashley Henning (web.com) re Bulk Purchase of .xyz domains (5/29/14)
  • Email from Andrew Gorrin to Negari re XYZ.Com Advertising IO and Marketing Agreement attaching signed agreements (5/20/14)
  • Email string Ashley Henning to Christine Nagey, Andrew Gorrin, Edward Angstadt re Bulk Purchase of .XYZ Domains (5/30/14)

The emails Verisign cites were dated May 2014, shortly before .xyz went into general availability June 2.

What we seem to be looking at here — and I’m getting into speculative territory here — are references to two more or less simultaneous transactions, both valued at exactly $3 million, between the two parties.

Both companies have consistently refused to address the nature of their deal, citing NDAs.

As you recall, the vast majority of .xyz’s early registrations were provided by NetSol, which pushed hundreds of thousands of free .xyz domains into its customers’ accounts without their explicit consent.

The number of freebies is believed to be about 350,000, based on comments Negari recently made to The Telegraph, in which he stated that .xyz, which had about 850,000 domains in its zone at the time, would have 500,000 registrations if the freebies were excluded.

With a registry fee roughly equivalent to .com’s (.xyz’s is believed to be a little lower), 350,000 names would work out to roughly $3 million.

Negari has stated previously that every .xyz registration was revenue-generating, even the freebies.

Is it possible that NetSol paid XYZ’s registry fees using money XYZ paid it for advertising? Is it possible no money changed hands at all?

I’m not saying either company has done anything illegal, and it’s completely possible I’m completely misunderstanding the situation, but it does rather put me in mind of the old “round-trip” deals that tech firms used to dishonestly prop up their tumbling revenue at the turn of the century.

Back in 2000, the dot-com bubble was on the verge of popping, taking the US economy with it, and companies facing the decline of their businesses came up with “creative” ways to show investors that they were still growing.

AOL Time Warner, for example, “effectively funded its own online advertising revenue by giving the counterparties the means to pay for advertising that they would not otherwise have purchased”.

Regulators exercised their legal options in these cases only where there appeared to be dishonest accounting, and I’ve seen no evidence to suggest that XYZ or Web.com unit NetSol have failed to adhere to anything but the highest accounting standards.

Again, I’m not saying we’re looking at a “round-trip” deal here, and there’s not a great deal of evidence to go on, but it sure smells familiar.

Certainly, questions have been raised that Verisign did not raise in its initial complaint.

Anyway.

On a personal note, I’d like to disclose that among the documents Verisign demanded from XYZ are dozens of pages of previously confidential emails exchanged between myself and Negari.

I’ve read them, and they’re mostly heated arguments about a) his refusal to give details about the NetSol deal and b) my purported lack of journalistic integrity whenever I published a post about .xyz with an even slightly negative angle.

XYZ had no choice but to supply these emails. I can’t blame it for complying with its legal requirements.

I wasn’t the only affected blogger. Mike Berkens, Konstantinos Zournas, Rick Schwartz and Morgan Linton also had their private correspondence compromised by Verisign.

I don’t know how they feel about this violation, but in my view this shows Verisign’s contempt for the media and its disregard for the sanctity of off-the-record conversations between reporters and their sources.

And that’s what I have to say about that.