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Could ICANN reject Verisign’s $135m .web bid?

Kevin Murphy, September 21, 2016, Domain Registries

ICANN is looking into demands for it to throw out Verisign’s covert $135 million winning bid for the highly prized .web gTLD.

ICANN last week told the judge hearing Donuts’ .web-related lawsuit that it is “currently in the process of investigating certain of the issues raised” by Donuts through its “internal accountability mechanisms”.

Donuts is suing for $22.5 million, claiming ICANN should have forced Nu Dot Co to disclose that its .web bid was being secretly bankrolled by Verisign and alleging that the .com heavyweight used NDC as cover to avoid regulatory scrutiny.

ICANN’s latest filing (pdf), made jointly with Donuts, asked for an extension to October 26 of ICANN’s deadline to file a response to Donuts’ complaint.

It was granted, the second time the deadline has been extended, but the judge warned it was also the final time.

The referenced “internal accountability mechanism” would seem to mean the Cooperative Engagement Process — a low-formality bilateral negotiation — that Donuts and fellow .web bidder Radix initiated against ICANN August 2.

The filing states that the “resolution of certain issues in controversy may be aided by allowing [ICANN] to complete its investigation of [Donuts’] allegations prior to the filing of its responsive pleading.”

In other words, Donuts is either hopeful that ICANN may be able to resolve some of its complaints in the next month, or it’s not particularly impatient about the case progressing.

Meanwhile, fellow .web applicant Afilias has demanded for the second time that ICANN hand over .web to it, as the second-highest bidder, throwing out the NDC/Verisign application.

In a September 9 letter, published last night, Afilias told ICANN to “disqualify and reject” NDC’s application, alleging at least three breaches of ICANN rules.

Afilias says that by refusing to disclose Verisign’s support for its bid, NDC broke the rules and should have its application thrown out.

The company also confirmed on the public record for what I believe is the first time that it was the second-highest bidder in the July 27 auction.

Afilias would pay somewhere between $57.5 million and $71.9 million for the gTLD, depending on what the high bid of the third-placed applicant was.

In its new letter, Afilias says NDC broke the rule from the Applicant Guidebook that does not allow applicants to “resell, assign or transfer any of applicant’s rights or obligations in connection with the application”.

It also says that NDC was obliged by the AGB to notify ICANN of “changes in financial position and changes in ownership or control”, which it did not.

It finally says that Verisign used NDC as a front during the auction, in violation of auction rules.

“In these circumstances, we submit that ICANN should disqualify NDC’s bid and offer to accept the application of Afilias, which placed the second highest exit bid,” Afilias general counsel Scott Hemphill wrote (pdf).

Hemphill told ICANN to defer from signing a Registry Agreement with NDC or Verisign, strongly implying that Afilias intends to invoke ICANN accountability mechanisms (presumably meaning the Request for Reconsideration process and/or Independent Review Process).

While Afilias and Donuts are both taking issue with the secretive nature of Verisign’s acquisition of .web, they’re not necessarily fighting the same corner.

Donuts is looking for $22.5 million because that’s roughly what it would have received if the .web contention set had been resolved via private auction and $135 million had been the winning bid.

But Afilias wants the ICANN auction outcome to stand, albeit with NDC’s top bid rejected. That would mean Donuts, Radix, and the other applicants would still receive nothing.

There’s also the question of other new gTLD applications that have prevailed at auction and been immediately transferred to third-party non-applicants.

The most notable example of this was .blog, which was won by shell company Primer Nivel with secretive backing from WordPress maker Automattic.

Donuts itself regularly wins gTLD auctions and immediately transfers its contracts to Rightside under a pre-existing agreement.

In both of those cases, the reassignment deals predated, but were not disclosed in, the respective applications.

There’s the recipe here for a messy, protracted bun fight over .web, which should come as no surprise to anyone.

Afilias set to get .hotel despite hacking claims

Kevin Murphy, August 19, 2016, Domain Registries

Afilias is back on the path to becoming the registry for .hotel, after ICANN decided claims of hacking by a former employee of the applicant did not warrant a rejection.

The ICANN board of directors decided last week that HOTEL Top-Level Domain Sarl, which was recently taken over by Afilias, did not gain any benefit when employee Dirk Krischenowski accessed competing applicants’ confidential documents via an ICANN web site.

Because HTLD had won a Community Priority Evaluation, it should now proceed to contracting, barring any further action from the other six applicants.

ICANN’s board said in its August 9 decision:

ICANN has not uncovered any evidence that: (i) the information Mr. Krischenowski may have obtained as a result of the portal issue was used to support HTLD’s application for .HOTEL; or (ii) any information obtained by Mr. Krischenowski enabled HTLD’s application to prevail in CPE.

It authorized ICANN staff to carry on processing the HTLD application.

The other applicants — Travel Reservations, Famous Four Media, Radix, Minds + Machines, Donuts and Fegistry — had called on ICANN in April to throw out the application, saying that to decline to do so would amount to “acquiescence in criminal acts”.

That’s because an ICANN investigation had discovered that Dirk Krischenowski, who ran a company with an almost 50% stake in HTLD, had downloaded hundreds of confidential documents belonging to competitors.

He did so via ICANN’s new gTLD applicants’ portal, which had been misconfigured to enable anyone to view any attachment from any application.

Krischenowski has consistently denied any wrongdoing, telling DI a few months ago that he simply used the tool that ICANN made available with the understanding that it was working as intended.

ICANN has now decided that because the unauthorized access incidents took place after HTLD had already submitted its CPE application, it could not have gained any benefit from whatever data Krischenowski managed to pull.

The board reasoned:

his searches relating to the .HOTEL Claimants did not occur until 27 March, 29 March and 11 April 2014. Therefore, even assuming that Mr. Krischenowski did obtain confidential information belonging to the .HOTEL Claimants, this would not have had any impact on the CPE process for HTLD’s .HOTEL application. Specifically, whether HTLD’s application met the CPE criteria was based upon the application as submitted in May 2012, or when the last documents amending the application were uploaded by HTLD on 30 August 2013 – all of which occurred before Mr. Krischenowski or his associates accessed any confidential information, which occurred from March 2014 through October 2014. In addition, there is no evidence, or claim by the .HOTEL Claimants, that the CPE Panel had any interaction at all with Mr. Krischenowski or HTLD during the CPE process, which began on 19 February 2014.

The HTLD/Afilias .hotel application is currently still listed on ICANN’s web site as “On Hold” while its rivals are still classified as “Will Not Proceed”.

It might be worth noting here — to people who say ICANN always tries to force contention sets to auction so it possibly makes a bit of cash — that this is an instance of it not doing so.

Afilias buys three gTLDs from Starting Dot

Kevin Murphy, August 9, 2016, Domain Registries

Registry upstart StartingDot has sold its small portfolio of new gTLDs to Afilias.

.archi, .bio and .ski are the three components of the package.

While the size of the deal was not disclosed, retail prices and zone file volumes suggest the portfolio probably brings in about $2 million a year in revenue.

The biggest seller of the three is .bio, which was originally intended for farmers but its basically unrestricted and has a variety of use cases.

Given the high ticket price — around $90 a year retail — .bio has a surprisingly impressive 14,000 names under management.

.archi and .ski have fared less well, with 3,500 and 6,200 names in their respective zones. Both have premium fees — retailing at about $100 and $60 a year respectively.

Due to the high prices, Afilias gets to call these TLDs “premium”.

.archi is the only one of the three to have registration restrictions — you need to be an architect to get one.

Both .archi and .bio have been available to buy for a couple of years, while .ski’s first renewal cycle is about a month away.

All three sell predominantly through European registrars. Starting Dot is itself based in Paris and Dublin.

The deal seem to have been struck due to Afilias’ we-buy-any-TLD offer, which executives discussed with us a year ago.

Afilias said that StartingDot execs Godefroy Jordan and Stephane Van Gelder will continue to be employed for a transition period.

Contract breach cited as TLD Registry switches from Afilias to Chinese government back-end

The break between TLD Registry and former back-end provider Afilias may be even less amicable than first thought.

I’m hearing that TLDR served Afilias with a “Notice of Material Breach” of contract earlier this year, threatening to move its two gTLDs to a rival owned by the Chinese government.

There may even be pending litigation.

Today TLDR confirmed in a statement that it’s switching the roughly 30,000 names in .在线 (.xn--3ds443g, “Chinese online”) and .中文网 (.xn--fiq228c5hs, “Chinese website”) from Afilias to Beijing Teleinfo Network Technology Co.

Tele-info is a little-known back-end provider currently servicing four pre-launch Latin-script Chinese gTLDs.

According to TLDR, the company is owned by the Chinese Academy of Telecommunication Research, which appears to be part of the Chinese government’s Ministry of Industry and Information Technology.

According to a source, back in February TLDR told Afilias that it would switch to Tele-info if Afilias was “unable or unwilling to remedy” unspecified contractual breaches by mid-May.

I don’t know what the alleged breaches were and neither company wants to talk about it.

“Afilias does not comment on pending litigation,” a spokesperson said.

“We are not commenting on contractual or litigation matters,” a TLDR spokesperson said.

TLDR said in a statement that the switch to Tele-info will help it get a Chinese government license, so Chinese registrants will be able to start using their domains. CEO Arto Isokoski said:

The completion of this milestone will hopefully pave the way for our accreditation with Chinese regulators, which ultimately allows our China-based customer’s names to resolve legally to a website hosted from within China.

It’s hard to argue with that logic — if it’s using a government back-end for its SRS, one can see how that would oil the gears of bureaucracy.

UPDATE 1753 UTC: Afilias has just provided DI with the following statement:

With respect to TLD Registry’s charges of breach of contract, Afilias categorically denies any breach of any kind whatsoever. Afilias has complied completely with our contractual obligations and responded to all requests for assistance with their various business priorities. Since we began supporting these 2 TLDs, Afilias has met every SLA and enabled the 2 TLDS to be 100% compliant with their technical and contractual obligations to ICANN. Afilias has provided 100% compliance on every SRS requirement, and maintained their DNS with 100% availability throughout the entire period of our stewardship. TLD Registry’s charges are completely without merit.

Afilias loses back-end deals on two Chinese gTLDs

TLD Registry, the Finnish/Irish registry that runs two Chinese-script gTLDs, has ditched Afilias in favor of a Chinese back-end provider.

Afilias said tonight that as of Friday it will no longer be the back-end for .在线 (.xn--3ds443g, “Chinese online”) and .中文网 (.xn--fiq228c5hs, “Chinese website”).

The company said:

Afilias has been directed by TLD Registry to shut down the Afilias operated SRS’s for .xn—3ds443g and .xn—fiq228c5hs on June 17, 2016 at 00:00:00 UTC and transfer the registry files to TLD Registry and its new provider. In accordance with this directive from our client, the SRS will be shut down and the files will be transferred, and Afilias will no longer operate the SRS for these two strings.

TLD Registry VP Pinky Brand declined to name the registry’s new back-end provider, beyond that the winning provider is Chinese.

The new back-end will be named in the next day or so, he said.

Registrars have been informed about the switch, Afilias said.

It’s not yet clear whether TLD Registry has decided to switch providers for cost reasons or in order to more deeply embed itself in China.

The company was founded by and is managed by Finns and is legally based in Ireland, but it only runs Chinese-script gTLDs.

The Chinese government has regulations, and is proposing more, preventing Chinese citizens using domains that do not meet certain guidelines, which include a corporate presence in China.

Several registries are opening up offices in China in order to abide by these rules, but I’m not aware of any that have switched back-ends for that reason.

The two gTLDs have fewer than 30,000 domains in their zone files between them.