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Donuts acquisition of Afilias closes, integration work begins

Kevin Murphy, January 4, 2021, Domain Registries

Donuts’ acquisition of Afilias closed without incident on December 29, the companies announced last week.

The registries said that registrants and registrar partners should not see any immediate disruption, but added that it’s now working on an integration plan that should see some changes over the longer term.

“Our combined teams can now begin developing an integration plan, with a goal of minimizing disruption to those we serve,” Akram Atallah, Donuts’ CEO, said in a press release. “We expect no changes in the short term, and ample notice on any changes that are decided.”

Atallah has previously told DI that it’s likely that Afilias’ owned and operated TLDs will likely be transferred to Donuts’ registry back-end, which is hosted on the Amazon cloud.

He also said that services such as the Domain Protected Marks List, currently available in 240+ Donuts gTLDs, should soon become available in Afilias’ 20-odd.

The deal, for an undisclosed sum, was subject to scrutiny by ICANN, which could have blocked it, but its board of directors considered the merger last month with no resolution passed.

ICANN could block Donuts from buying Afilias

Kevin Murphy, December 14, 2020, Domain Registries

In what appears to be an almost unprecedented move, ICANN is to review Donuts’ proposed acquisition of rival Afilias at the highest level, raising a question mark over the industry mega-merger.

The org’s board of directors will meet Thursday to consider, among other things, “Afilias Change of Control Approval Request”.

It’s highly unusual for a change of control to be discussed at such a high level.

Every registry contract contains clauses requiring ICANN’s consent before a registry switches owners, and it has approved hundreds over the last decade. But the process is usually handled by legal staff, without board involvement.

The only time, to my memory, that the board has got involved was when it withheld consent from .org manager Public Interest Registry earlier this year.

It’s not entirely clear why Afilias has been singled out for special treatment.

It’s probably not due to its status as a legacy gTLD registry operator because of .info — when GoDaddy bought .biz operator Neustar’s registry business earlier this year, there was no such board review.

In addition, the .info contract’s change of control provisions are very similar to those in the standard new gTLD contract.

Could it be due to Donuts executives former ties to ICANN and the perception of a conflict of interest? Again, it seems unlikely.

While Donuts CEO Akram Atallah is former president of ICANN’s Global Domains Division, former ICANN CEO Fadi ChehadĂ© is no longer involved with Donuts owner Abry Partners, having jumped to erstwhile PIR bidder Ethos Capital this July.

Are there competition concerns? It’s a possibility.

Afilias holds the contracts for 24 gTLDs new and legacy, but supports a couple hundred more, while Donuts is contracted for over 240.

But between them, they have barely 10 million domains under management. Donuts isn’t even the market leader in terms of new gTLD registrations.

And ICANN avoids making competition pronouncements like the plague, preferring instead to refer to national competition regulators.

Could ICANN’s interest have been perked by the fact that Afilias is the back-end provider for .org’s 10 million domains, and the proposed Donuts deal comes hot on the heels of the failed PIR acquisition? Again, it’s a possibility.

But none of the dangers ICANN identified in the .org deal — such as pricing, freedom of speech, and the change from a non-profit to for-profit corporate structure — appear to apply here.

There could be technical concerns. Atallah told DI a couple weeks ago that the plan was to ultimately migrate its managed TLDs to its Amazon cloud-based registry.

But moving its clients’ TLDs to a new back-end infrastructure would require their consent — it would be up to PIR and its overlords at the Internet Society to agree to moving .org to the cloud.

I think it’s likely that a combination of all the above factors, and maybe others, are what’s driving the Afilias acquisition to the ICANN boardroom. It will be interesting to see what the board decrees.

Credit union gTLD changes hands to perhaps surprising buyer

Kevin Murphy, December 4, 2020, Domain Registries

Yet another new gTLD is moving to a new registry, but this time it’s not a case of a large gTLD holder bulking up its portfolio.

This time it’s .creditunion, and the new registry is 18-year-old .coop registry DotCooperation, according to ICANN records.

.creditunion was delegated to the Credit Union Nation Association, the trade group for US credit unions, in 2015 and launched in 2017.

Like .coop, it’s a tightly restricted TLD, with eligibility only for those with a “meaningful nexus to the credit union sector”.

It had 580 domains at the last count, having peaked at 640 a couple years ago. The domains are being used as primary domains by at least a couple dozen credit unions.

But volume was never the plan for .creditunion, with CUNA specifically citing .coop as its role model in its 2012 new gTLD application.

“The success of the gTLD will not be measured by the number of domain names registered. Instead, it will be measured by the level of consumer recognition and trust,” CUNA said back then.

CUNA actually announced the DotCooperation deal in a press release on its web site at the end of September, but I don’t think anyone in the domain industry noticed.

.coop, which is reserved for co-operative associations, was one of the original 2000-round new gTLDs. It’s been chugging along at relatively low volume for the last two decades, peaking at 15,000 in February 2013.

For the last few years, it’s been growing by maybe a dozen or so domains a month, and currently stands at about 8,300 names.

DotCooperation is jointly owned by the National Cooperative Business Association and the International Cooperative Alliance.

Donuts boss discusses shock Afilias deal

Kevin Murphy, November 20, 2020, Domain Registries

Afilias is to spin off its registrar business and also its contested application for the .web gTLD, following its acquisition by Donuts, according to Donuts CEO Akram Atallah.

Speaking to DI last night, Atallah explained a little about how the deal, which creates a registry with about 450 strings under management, came about.

Rather than a straightforward bilateral negotiation, is seems like Afilias was shopping itself around for a buyer. Several companies were invited to bid, and Donuts won. Atallah said he does not know how many, or which, bidders Donuts was competing against.

Afilias was making over $100 million a year in revenue last time its accounts were published in 2017, but its largest gTLDs are in decline and it took a big hit when Public Interest Registry renegotiated its back-end contract for .org in 2018.

The acquisition, the value of which has not been disclosed, does not include Afilias’ registrar or mobile businesses, which Atallah said will be spun off.

He also revealed that the deal does not include Afilias’ .web gTLD application, which came second in an ICANN auction won by a Verisign-backed bidder a few years back.

Afilias is currently waiting for the results of an Independent Review Process case that seeks to overturn the winning $135 million bid and award the potentially lucrative gTLD to Afilias. The case was heard in August and a decision is surely not many months away.

What the deal does include are all of Afilias’ registry assets, including its owned gTLDs and its back-end service provider contracts.

I asked Atallah what the plans are for migrating or integrating the two registry platforms. While Afilias runs its own data centers, Donuts migrated its registry to Amazon’s AWS cloud service earlier this year.

“We have to make sure whatever we do is as painless as possible to our registrar channel and partners,” he said. “We believe that at least on the new gTLDs that they have it will probably be easier for us to move them to our back-end, which is on the cloud already… We’ll probably do that fairly quickly.”

“But remember they have other registries and ccTLDs that don’t own that they run on their back-end, so there’ll be business issues and negotiations there to see what we can do there,” he added.

While he’s not expecting anyone to notice any big changes immediately, Atallah said that over time features such as the companies’ different EPP commands will be merged, and that valued-added services will start to cross-pollinate.

“All of the features we have on our TLDs will migrate to their TLDs and vice versa,” he said.

That means things like the Domain Protected Marks List, a defensive registration service for trademark owners, will start to show up in Afilias gTLDs before long, he said.

I asked about the possibility of layoffs, something that is no doubt worrying staff at both companies right now and seems quite possible given the move to the cloud, but Atallah said it was too early to say. Nothing will change until the deal closes at the end of the year, he said.

“Once we actually close, we’ll sit down with the management of the Afilias registry team and look at all the different assets that we have and try to pick the best in class in technology and services,” he said.

Having seen some mutterings about competition concerns, I put that question to Atallah. He laughed it away, pointing out that, even combined with Afilias, Donuts will have fewer than 15 million domains under management.

Donuts acquires Afilias to create registry giant

Kevin Murphy, November 19, 2020, Domain Registries

Donuts has agreed to acquire Afilias, the two companies have just announced.

The purchase, for an undisclosed sum, will create a registry giant, responsible in one way or the other for over 450 top-level domains.

The deal will not include Afilias’ registrar or mobile software businesses, the companies said.

The acquisition, between two private companies, is expected to close before the end of the year.

Afilias is probably best known for .info, which it has been running for almost two decades. That gTLD has almost 4.7 million domains under management.

It also runs .mobi, .pro and 21 new gTLDs from the 2012 application round, including .global, .green, .pet, .kim and .lgbt.

It acts as the back-end registry provider for over 200 third-party TLDs, the largest of which is .org, and provides DNS resolution services for other TLDs and enterprises.

Donuts owns the largest portfolio of new gTLDs, with 242 in its stable at the last count.

.trust finds a new home with UNR

Kevin Murphy, November 12, 2020, Domain Registries

UNR has acquired the contract to run the .trust new gTLD.

According to ICANN records, the registry agreement was transferred to UNR, the registry arm of the former Uniregistry, back in June.

It’s the second time the TLD has changed hands since it was delegated back in 2014.

It was originally awarded by ICANN to Deutsche Post, but was quickly sold to NCC Group, which launched it in early 2015.

While .trust is technically live, it has not actually sold any domain names yet and doesn’t appear to have any registrars. The only domains in use, a mere half-dozen, all appear to belong to NCC.

Expect that to change under its new ownership.

I first speculated that .trust was for sale back in 2016, after the then-CEO of NCC utterly slagged off the new gTLD program.

But when NCC sold off its domain name assets in 2017, .trust remained with the company.

The gTLD seems to be following UNR’s chief legal officer, Jean-Christophe Vignes, who ran it under NCC before joining UNR two years ago.

I believe it’s UNR’s 25th gTLD. The company has not yet announced its plans for .trust.

Web.com acquires Kiwi registrar Freeparking

Kevin Murphy, November 9, 2020, Domain Registrars

Web.com has acquired what it calls New Zealand’s largest registrar, Freeparking.

Freeparking, not to be confused with other registrars of the same name, was part of the Umbrellar Group of web services companies.

According to Web.com, its new buy has 90,000 unique customers under management.

The company, which also owns the likes of Register.com and Network Solutions, said the acquisition is part of its strategy to expand in the Asia-Pacific region.

Freeparking also owns the Open Host, Domains4less and Discount Domains brand registrars. It also appears to be a Tucows reseller.

No financial details of the deal were announced. Web.com was taken private two years ago by private equity firm Siris Capital.

Another domain firm going private as Endurance announces $3 billion deal

Kevin Murphy, November 3, 2020, Domain Registrars

Endurance International, owner of registrar brands including Domain.com, BigRock and BuyDomains, plans to go private in a $3 billion private equity deal.

The buyer is Clearlake Capital group, in what appears to be its first foray into the domain name market.

It has offered to pay $9.50 for each Endurance share, saying it’s a 79% premium on the closing price the day before the media first got a whiff of a deal being in the works back in September and a 64% premium on Friday’s close.

The deal is still subject to shareholder approval, but Endurance says institutional investors accounting for 36% of its shares have already promised to vote in favor.

Endurance yesterday also announced its third-quarter financial results. It reported net income down from $7.8 million to $6.7 million, on revenue that was up 3% at $278.4 million.

The company does not break out what portion of its revenue or profit comes from domains. Hosting and web marketing services are also a big part of its business.

Are 25x price increases on the cards as XYZ corners the cars market?

Kevin Murphy, October 14, 2020, Domain Registries

Grab-happy registry XYZ.com has expanded its stable of strings to 22 after buying five little-used gTLDs from Dominion Registries.

It recently came into control of .autos, .motorcycles, .homes, .yachts, and .boats, CEO Daniel Negari confirmed earlier this week.

Following XYZ’s buyout of .auto, .car and .cars from former joint venture partner UNR a couple months back, it seems the company now pretty much has a lock on the English-language automotive domain market.

This raises the question, so far unanswered by the registry, about whether .autos registrants could be about to face some of the steepest price increases the new gTLD market has seen to date.

XYZ’s .auto, .car and .cars currently command among the highest base prices in the market — about $2,500 at retail for a basic, non-premium name — while .autos has been chugging along at $100 per domain per year.

It would make perfect sense for the registry to give its new acquisition a 25x price increase to align it with the rest of the automotive portfolio, but so far the company is tight-lipped on the subject.

Fortunately, the current pool of .autos registrants is quite small — a little over 400 names, about the same as .auto but a couple hundred ahead of .cars and .car — so there would not be many customers to piss off.

Indeed, three of the other TLDs XYZ just bought have what you might generously call “growth potential”.

The only one of the five gTLDs to have more than 500 domains under management is .homes, which has more than 13,000.

With XYZ’s broader channel reach and superior marketing prowess, there’s certainly upside on the horizon.

Webcentral rejects Web.com buyout bid for LOWER offer from Aussie telco

Kevin Murphy, September 18, 2020, Domain Registrars

Pioneering registrar Webcentral has turned down Web.com’s offer to acquire it in favor of a lower offer from telecommunications company 5G Networks.

The company announced this week that 5GN will pay one share for ever 12 shares of Webcentral, which works to to between AUD 18.7 million and AUD 19.5 million ($14.24), depending on which trailing average price you use.

That’s between AUD 0.153 and AUD 0.16 per share, compared to Web.com’s recently increased bid of AUD 0.18 per share.

It’s a 138% premium based on 5GN’s September 16 closing price and Webcentral’s closing price before the Web.com deal was announced two months ago.

So why take the lower offer? Webcentral offered a few reasons, the most compelling of which was that there seems to have been a certain amount of arm-twisting going on.

The Web.com deal would have required 75% of Webcentral’s shares to be voted in favor of the acquisition and 5GN already owned over 10% and said it would vote them against. The 5GN deal only requires it to acquire 50.1% of the shares.

5GN will also pay off Webcentral’s debts and pay Web.com the AUD 500,000 penalty incurred for breaking the original July deal.

Webcentral was previously known as ARQ Group and, as one of the original five ICANN=accredited registrars, Melbourne IT. It owns the registrars Netregistry and Domainz. it became Webcentral after selling its wholesale business to CentralNic and its enterprise unit to private equity.

5GN, despite the name, is a largely wire-based telco and hosting provider. It doesn’t currently own any registrars.