Latest news of the domain name industry

Recent Posts

Oh, the irony! Banned anti-Islam activist shows up on “Turkish” new gTLD domain

Kevin Murphy, April 23, 2019, Domain Policy

Tommy Robinson, who has been banned from most major social media platforms due to his anti-Islam “hate speech”, is now conducting business via a domain name that some believe rightfully belongs to the Muslim-majority nation of Turkey.
The registration could add fuel to the fight between ICANN and its governmental advisers over whether certain domains should be blocked or restricted.
Robinson, the nom de guerre of the man born Stephen Yaxley-Lennon, is the founder and former leader of the far-right English Defence League and known primarily for stirring up anti-Muslim sentiment in the UK for the last decade.
He’s currently, controversially, an adviser to the UK Independence Party. Former UKIP leader Nigel Farage, also a thoroughly unpleasant bloke, considers Robinson so far to the right he quit the party in response to the appointment.
Over the last year, Robinson has been banned from Twitter, Facebook and Instagram, and had his YouTube account placed under serious restrictions. This month, he was also banned from SnapChat, and the EDL he used to lead was among a handful of far-right groups banned from Facebook.
Since his personal Facebook page went dark in February, he’s been promoting his new web site as the primary destination for his supporters.
It features news about his activities — mainly his ongoing fights against social media platforms and an overturned contempt of court conviction in the UK — as well as summaries of basically any sufficiently divisive anti-Islam, anti-immigration, or pro-Brexit stories his writers come across.
The domain he’s using is tr.news, a new gTLD domain in a Donuts-owned registry. It was registered in December via GoDaddy.
Given it’s a two-character domain, it will have been registry-reserved and would have commanded a premium price. Other two-character .news domains are currently available on GoDaddy for between $200 and $10,000 for the first year.
It will come as no surprise at all for you to learn that the domain was transferred out of GoDaddy, which occasionally kicks out customers with distasteful views, to Epik, now de facto home of those with far-right views, a couple of weeks after the web site launched.
The irony of the choice of domain is that many governments would claim that tr.news — indeed any two-character domain, in any gTLD, which matches any country-code — rightfully belongs to Turkey, a nation of about 80 million nominal Muslims.
TR is the ISO 3166-1 two-character code for Turkey, and until a couple of years ago new gTLD registries were banned from selling any of these ccTLD-match two-letter domains, due to complaints from ICANN’s Governmental Advisory Committee.
Many governments, including the UK and US, couldn’t care less who registers their matching domain. Others, such as France, Italy and Israel, want bans on specific domains such as it.pizza and il.army. Other countries have asked for blanket bans on their ccTLD-match being used at all, in any gTLD.
When new gTLDs initially launched in 2012, all ccTLD matches were banned by ICANN contract. In 2014, ICANN introduced a cumbersome government-approval system under which governments had to be consulted before their matches were released for registration.
Since December 2016, the policy (pdf) has been that registries can release any two-letter domains, subject to a provision that they not be used by registrants to falsely imply an affiliation with the country or registry with the matching ccTLD.
Robinson is certainly not making such an implication. I imagine he’d be as surprised as his readers to learn that his new domain has a Turkish connection. It’s likely the only people who noticed are ICANN nerds and the Turkish themselves.
Would the Turkish people look at tr.news and assume, from the domain alone, that it had some connection to Turkey? I think many would, though I have no idea whether they would assume it was endorsed by the government or the ccTLD registry.
Would Turkey — a government whose censorship regime makes Robinson’s social media plight look like unbounded liberalism — be happy to learn the domain matching its country code is being used primarily to deliver divisive content about the coreligionists of the vast majority of its citizens? Probably not.
But under current ICANN policy it does not appear there’s much that can be done about it. If Robinson is not attempting to pass himself of as an affiliate of the Turkish government or ccTLD registry, there’s no avenue for complaint.
However, after taking the cuffs off registries with its December 2016 pronouncement, allowing them to sell two-letter domains with barely any restrictions, ICANN has faced continued complaints from the GAC — complaints that have yet to be resolved.
The GAC has been telling ICANN for the last two years that some of its members believe the decision to release two-character names went against previous GAC advice, and ICANN has been patiently explaining the process it went through to arrive at the current policy, which included taking GAC advice and government comments into account.
In what appears to be a kind of peace offering, ICANN recently told the GAC (pdf) that it is developing an online tool that “will provide awareness of the registration of two-character domains and allow for governments to report concerns”.
The GAC, in its most-recent communique, told ICANN its members would test the tool and report back at the public meeting in Montreal this November.
The tool was not available in December, when tr.news was registered, so it’s not clear whether Turkey will have received a formal notification that its ccTLD-match domain is now registered, live, and being used to whip up mistrust of Muslims.
Update April 30: ICANN informs me that the tool has been available since February, but that it does not push notifications to governments. Rather, governments can search to see if their two-letter codes have been registered in which gTLDs.

“Stringent” new online censorship law could affect domain companies

Kevin Murphy, April 8, 2019, Domain Policy

Blame Zuck.
The UK government is planning to introduce what it calls “stringent” new laws to tackle abusive behavior online, and there’s a chance it could wind up capturing domain name registries and registrars in its net.
The Department for Culture, Media and Sport this morning published what it calls the Online Harms White Paper, an initial 12-week consultation document that could lead to legislation being drafted at a later date.
The paper calls for the creation of a new independent regulator, charged with overseeing social media companies’ efforts to reduce the availability of content such as incitements to violence, self-harm, suicide, child abuse, “hate crime” and even “fake news”.
It basically would increase the amount of liability that companies have for user-generated content hosted on their services, even when that content is not necessarily illegal but is nevertheless considered “harmful”.
The regulator would have to create a code of conduct for companies the legislation covers to abide by.
When the code is breached, the regulator would have the authority to issue fines — possibly comparable to the 4% of profits that can be fined under GDPR — against not only the companies themselves but also their senior management.
The paper seems to most directly address ongoing tabloid scandals related to Facebook and its ilk, such as the suicide of Molly Russell, a 14-year-old who viewed material related to self-harm on Instagram before her death.
While it does not mention domain names once, the government clearly anticipates casting a wide net. The paper states:

The scope will include companies from a range of sectors, including social media companies, public discussion forums, retailers that allow users to review products online, along with non-profit organisations, file sharing sites and cloud hosting providers.

That’s a broad enough definition such that it could even cover blogs, including this one, that allow users to post comments.
The paper also discusses asking search engines to remove sites from their indexes, and compelling ISPs to block abusive sites as a “last resort” measure.
There’s a short mental hop from ISP blocking to domain name takedowns, in my view.
The paper also discusses steps the regulator could take to ensure companies with no UK legal presence are still covered by the rules.
While the paper, as I say, does not mention the domain name industry once, subsidiary services provided by registrars, such as hosting, could be directly affected.
There’s no guarantee that the paper will become a bill. There’s already a backlash from those who believe it constitutes unacceptable censorship, comparable to regimes such as in China.
There’s also no guarantee such a bill would eventually become law. The UK government is arguably currently the weakest it has ever been, with a propped-up minority in Parliament and many MPs in open revolt over Brexit.
With talk of an early general election incessant recently, it’s also possible the government may not last long enough to bring its plans to fruition.
Still, it’s probably something the domain industry, including ICANN, should probably keep an eye on.
The full 100-page white paper can be found here (pdf) and an executive summary can be read here.

After NZ shooting, Epik has a Monster PR problem

Kevin Murphy, March 21, 2019, Domain Registrars

Domain name registrar Epik.com has come under fire from prominent domain investors and others after CEO Rob Monster suggested that video of the recent mosque shootings in New Zealand, which he hosted on an Epik service and shared on social media, was a hoax.
Domainer-bloggers including Shane Cultra, Konstantinos Zournas, and DNPlaybook.com have questioned Monster’s decision, and one of his own senior staffers, former DomainNameWire contributor Joseph Peterson, took to a domainer forum to in parts criticize and defend his boss.
Cultra was particularly harsh in his criticism this week, calling for domainers to move their domains out of Epik and for his friend, Epik director Braden Pollock, to remove himself from the board.
He wrote: “I would like to think that any respectable domain investor remove their domains from Epik… Rob Monster’s agenda has no place in our industry”.
DNPlaybook wrote that Monster has become “Facilitator of Hate and Promoter of Conspiracies”.
Other domainers have written that they have removed, or will remove, their domains from Epik, though Monster wrote earlier this week that the impact on its business so far has been minimal.
Epik is an ICANN-accredited registrar with about 400,000 gTLD names under management at the last count. It’s almost doubled in size over the last two years.
The company and its CEO have been subject to criticism for months over their decision to provide services to web sites that enable the promotion of far-right ideologies such as white supremacism and Nazism.
But the latest row kicked off on March 15, when Monster used his personal Twitter account to share a link to the self-shot, first-person video of one of the terrorist attacks at a mosque in Christchurch.
Fifty people, all Muslims attending Friday prayers or in the vicinity of the mosques, were killed by the same person during the attacks.
The first attack was live-streamed on Facebook from a head-mounted camera. Apparently viewed live by fewer than 200 people, copies were nevertheless widely circulated on social media and elsewhere.
The copy of the video linked to by Monster was hosted by Epik-owned privacy services provider Anonymize.com, on an “effectively uncensorable” file-sharing service the company is currently developing.
In a subsequent tweet, Monster threw doubt upon whether the footage was real, writing: “Shell casings simply vanish into thin air. Etc. It looks like low budget CGI”.
Anyone with a grain of common sense who has seen the video will tell you that Monster is clearly talking absolute bollocks here. It’s not a fake.
Monster’s Twitter account has since been deleted. According to Peterson, Epik’s director of operations, Monster deleted it himself. Reading between the lines, it appears he was pressured to do so by his staff, including Peterson.
Monster has not yet deleted — and is in fact still actively using — his @epik account on Gab.com, the Twitter clone often used by far-right activists who have been banned from or choose not to use Twitter due to their views.
A March 15 post on Gab by Monster links to a copy of the Christchurch killer’s rambling “manifesto”, again hosted on anonymize.com. This link is still live, but I’ve redacted it in the screen-cap below, which shows Monster effectively using the manifesto to promote the forthcoming Anonymize service.
Monster on Gab
I’ve been unable to confirm whether Epik is still hosting the video of the attack, though there are reports that it was taken down a matter of hours after posting. (UPDATE 1816 UTC: the video is in fact still live on the Anonymize service).
Epik and Monster drew attention last November when Monster publicly offered to become the registrar for Gab.com, after the domain was suspended by GoDaddy.
Monster at the time said the move was to protect freedom of speech online.
Epik again attracted attention last month when it acquired BitMitigate, a denial-of-service protection startup which has been providing services to unapologetic Nazi propaganda site The Daily Stormer since August 2017, when Cloudflare told the site to GTFO.
It’s also taken on the domain business of video hosting site BitChute, which is often used as a refuge for political vloggers (including some on the far right) who have been demonetized or banned by YouTube.
For these reasons, in January Epik attracted the attention of the Southern Poverty Law Center, an anti-racist group based in the US. The SPLC wrote that “Epik is cornering the market on websites where hate speech is thriving”.
The post, and other news reports, strongly hint that Monster’s own political views might be more aligned with those of his customers than he cares to admit.
Monster naturally rebuts these suggestions, calling the SPLC post “highly defamatory and inaccurate”. In one of his most recent posts on Namepros, before his staff asked him to back away from the public square for a while, he wrote:

As for those members of the domain community who have taken the opportunity this week to rebuke me for allowing free speech to continue on the Internet, please know that I am neither seeking publicity or controversy. I am of sound mind. I am not a Nazi, an anti-semite, a homophobe, a misogynist, a bigot, or a racist. I believe love and understanding will overcome hate and divisiveness.
The future of the domain industry is being determined in 2019. Censorship, WHOIS privacy, sinkholing, DDoS, deplatforming, demonetization, unpersoning, are all symptoms of the disease which is a relentless desire by the few to dictate the narratives and choices to be consumed by the many.

Peterson has also denied that his boss harbors secret extremist views, in a series of lengthy, nuanced posts (starting here) on Namepros this week.
He writes that Monster has a “weird conspiratorial streak” and a natural inclination to believe in “false flag” conspiracy theories. He doubts the official story on 9/11 and believes the moon landings were faked, Peterson said. Monster is also a “Bible-believing Christian”, according to his Gab profile.
Peterson also writes that a significant portion of Epik’s employees, including some in important roles, are Muslims. He writes that he was “appalled” by Monster’s decision to post the video, but added:

But to infer that he did this because he hates muslims and condones murder is not just simplistic; it is LUDICROUS. One person murders 30+ muslims. The other person hires them and works with them closely on a daily basis. To equate these 2 is simply wrong. Whatever the reasons Rob felt it necessary to re-publish a link to content others had decided to censor, hatred of muslims was NOT the reason.

He goes on to say:

I object to Epik — the team I work with and the customers we look after — being portrayed falsely as some epicenter of “hate speech” or the alt right. We are not. We are a domain registrar and marketplace with a wide range of services. We are a company whose boss has taken controversial (and in some ways courageous) steps to protect free speech. Unfortunately, that same boss has stepped on that message with some very bad PR moves. When Rob does that, it irritates me to the point of exasperation. And I tell him so.

According to Peterson, Monster and his wife came under attack last year with a leafleting campaign in his local neighborhood, denouncing him as a Nazi.
He suspects this kind of behavior may have caused his boss to “double-down” on exactly the same kinds of activities that invited the controversy in the first place.
Whatever the reason, Epik certainly has got a PR problem on its hands right now.
I doubt this is the last we’ll hear of it.

Nominet takes down 32,000 domains for IP infringement

Kevin Murphy, November 21, 2018, Domain Registries

The number of .uk domains suspended by Nominet has doubled over the last year, almost entirely due to takedown requests concerning intellectual property.
The .uk registry said this week that it suspended 32,813 domains in the 12 months to October 31, up from 16,632 in the year-ago period.
It’s the fourth year in a row that the number of suspensions has more than doubled. In 2014, it was a paltry 948.
While Nominet has trusted notifier relationships with 10 law enforcement agencies, it’s the Police Intellectual Property Crimes Unit that is responsible for almost all of the takedown requests, 32,669 this year.
No court order or judicial review is required. Nominet simply carries out unspecified “administrative checks” then suspends the domain.
Only 114 domains did not make the cut this year, Nominet said, but that’s up considerably from 32 last year.
There’s an appeals mechanism that can be used by registrants to restore their domains, for example if they’ve removed the infringing content. It was used successfully 16 times in the year, up by one on last year.
The registry also reported that no domains were suspended due to its ban on incitement-to-rape domains, down from two last year, but that staff had to manually review 2,717 new registrations containing suspect strings.

Incel hate site jumps to Iceland after doMEn suspends .me domain

Kevin Murphy, November 21, 2018, Domain Registries

Incels.me, a web forum that hosts misogynist rants by “involuntarily celibate” men, has found a new home after .me registry doMEn suspended its domain.
The web site has reappeared, apparently unscathed, under Iceland’s .is domain, at incels.is.
doMEn said in a blog post yesterday that it had suspended incels.me at the registry level due to the owner “allowing part of its members to continuously promote violence and hate speech”.
The suspension happened October 15, and the site reappeared in .is not long after. It’s not entirely clear why doMEn chose to explain its decision over a month later. It said:

The decision to suspend the domain was made after the .ME Registry exhausted all other possibilities that could assure us that the registrant of incels.me domain and the owner of i
incels.me forum was able to remove the subject content and prevent the same or similar content from appearing on the forum again.

An “incel” is a man who has decided that he is too ugly, charmless, short, stupid or otherwise unattractive, and is therefore permanently unfuckable.
While that may provoke sympathetic thoughts, a great many of the incels frequenting sites like incels.me choose to channel their frustration into cartoonish misogyny ranging from the laughable to the extremely disturbing.
While the registry didn’t mention it, the site also has many threads that appear to encourage suicide.
doMEn seems to have turned off the domain because certain threads crossed the line from misogyny to incitement to violence against women.
The Montenegro-based company said it had been monitoring the site since May, after being told that “certain members” of the forum “might have been involved in or associated with” an attack in Toronto that killed 10 people in April, a charge the incels.is admin denies.
The second reason given — preventing content appearing in future — may be the crux here.
The site’s administrator said in a post on the new site that he had personally removed all of the threads highlighted by doMEN as being in violation of its registry policies.
He also posted a partial email thread between himself and his former registrar, China-based NiceNIC.net, in which he explains how difficult it is to monitor all the content posted by his users. He wrote on the forum:

They obviously weren’t going to give us a fair shake either way, and we’re not going to search through 1.6 MILLION posts nor do we have the technological capabilities to check to see if any of them are against their vague anti-abuse policy.

Domain registries have no place in enforcing arbitrary rules against domains that go against their ideology.

It seems from the thread that Afilias, 37%-owner of doMEn and .me back-end provider, had a hands-on role in the suspension.
Incels certainly isn’t the first controversial site to have to resort to TLD-hopping to stay alive.
The most notable example is piracy site KickAssTorrents, which bounced from ccTLD to ccTLD for years before finally being shut down by the US Feds.
The incels.is admin said he had confidence in Iceland’s registry due to “their stance as pro free-speech enforcers”.
But ISNIC is not above suspending domains when the associated sites break Icelandic law. Four years ago it took down some domains associated with ISIS.
The takedown comes not long after GoDaddy attracted attention for suspending the domain of far-right Twitter clone Gab.com, again due to claims of incitement to violence related to an act of domestic terrorism.

ICANN probing Donuts and Tucows over anti-Jewish web site

Kevin Murphy, November 16, 2018, Domain Policy

ICANN is investigating Tucows and Donuts over a web site that hosts antisemitic, white supremacist content.
CEO Goran Marby said in a letter published this week that he has referred a complaint about the web site judas.watch to ICANN’s Compliance department.
The web site in question says it is dedicated to documenting “anti-White traitors, agitators and subversives & highlighting Jewish influence.” It appears to be half database, half blog.
Its method of “highlighting Jewish influence” is possibly the most disturbing part — the site tags people it believes are Jewish with a yellow Star of David, mimicking the way the Nazis identified Jews during the Holocaust.
The site is quite liberal in how it applies these stars, going so far as to label UK Labour Party leader Jeremy Corbyn, who has been fighting off his own allegations of antisemitism for years, as Jewish.
Over 1,600 people and organizations are currently listed. Posts there also seem keen to highlight its subjects’ sexual orientation.
As far as I can tell, there are no direct calls to violence on the site, and the level of what you might call “hate speech” is pretty mild. It publishes the social media handles of its subjects, but I could not find any physical addresses or phone numbers.
The complaint to ICANN (pdf) came from WerteInitiative (“Values Initiative”), which appears to be a small, relatively new Jewish civil society group based in Germany.
WerteInitiative said judas.watch “poses a direct threat to the named persons with unforeseeable consequences for them, and especially so for the identified Jews”.
“We want this site banned from the Internet and ask for your help in doing so: can you help us to find out who behind this page is, so we can get it banned in Germany?” the letter concludes.
The domain has been behind Whois privacy since it was registered in 2014, so the registrant’s name was not public even prior to GDPR.
Marby, in response (pdf), says the complaint “raises a serious issue”.
While he goes to some lengths to explain that ICANN does not have the authority, contractual or otherwise, to demand the suspension of any domain name, he said he has nevertheless referred the complaint to Compliance.
Compliance has already reached out to the organization for more information, Marby said.
He also encouraged WerteInitiative to talk to .watch registry Donuts and judas.watch registrar eNom (owned by Tucows), as well as the hosting company, to see if that could help resolve the issue.
While ICANN is always adamant that it does not venture into content regulation, it strikes me that this exchange shows just what a tightrope it walks.
It comes against the backdrop of controversy over the suspension by GoDaddy of the domain Gab.com, a Twitter clone largely hosting far-right voices that have been banned from other social media platforms.

Uniregistry calls for domain Bill of Rights as Schilling says Gab.com was not booted

Kevin Murphy, November 9, 2018, Domain Services

Uniregistry has called for a “Domain Bill of Rights” to protect free speech in a world were domain takedowns can be used to de-platform controversial speakers.
Meanwhile, CEO Frank Schilling has told DI that the company did not expel the right-wing social network Gab.com from Uniregistry’s platform, and would have allowed it to stay.
In a press release this week, Uniregistry COO Kanchan Mhatre said that while the company rejects “hatred and bigotry”, free speech is an “inalienable” human right.
The company called for the new agreement “to guarantee every domain name owner a formal ‘due process’ when being faced with accusations and demands for censorship”.
Schilling said that Uniregistry’s idea for a Domain Bill of Rights is still in the early stages. It has sketched out 10 draft bullet points but is not ready to publish them yet.
The press release was issued to coincide with Tim Berners-Lee’s proposal for a “Contract for the Web”, a set of broad principles governing rights and responsibilities online.
But it also coincided with the ongoing controversy over Gab.com, the microblogging platform favored by right-wing voices, including many white supremacists, that have been kicked off Twitter.
The guy who murdered 11 people at a Synagogue in Pittsburgh last month used Gab, a back-breaking straw which prompted GoDaddy to inform the network it intended to suspend its domain unless it was immediately moved to another registrar.
It’s not the first time GoDaddy has shut down the far right for breaching its terms of service. Last year, it took the same action against a neo-Nazi site.
The Gab.com domain briefly wound up at Uniregistry, before Epik CEO Rob Monster stated publicly that he would offer Gab a home. Gab took him up on his offer, and transferred away from Uniregistry.
Uniregistry’s Schilling confirmed that “We did not ask gab.com to leave our platform… they were welcome to stay subject to law”.
Monster said in a blog post largely praising Gab and founder Andrew Torba that “De-Platforming is Digital Censorship”. He noted that for Gab, “there is a duty to monitor and lightly curate, keeping content within the bounds of the law”.

Google adds censorship workaround to Android devices

Kevin Murphy, October 5, 2018, Domain Tech

Google is using experimental DNS to help people in censorious regimes access blocked web sites.
Alphabet sister company Jigsaw this week released an Android app called Intra, which enables users to tunnel their DNS queries over HTTPS to compatible servers, avoiding common types of on-the-wire manipulation.
The company reportedly says it has been testing the app with Venezuelan dissidents recently.
The feature will also be built in to the next version of Android — known as Android 9 or Android Pie — where it will be called Private DNS.
The app is designed for people who for one reason or another are unable to update their device’s OS.
Intra and Private DNS use “DNS over HTTPS”, an emerging protocol Google and others have been working on for a while.
As it’s non-standard, end users will have to configure their devices or Intra apps to use a DoH-compatible DNS server. The public DNS services operated by Google (8.8.8.8) and Cloudflare (1.1.1.1) are both currently compatible.
The release comes even as Google faces controversy for allegedly kowtowing to the Chinese government’s demands for censored search and news results.
You may notice that the new app is being marketed via a .org web site, rather than Google’s own .app gTLD, but intra.app takes visitors directly to the Intra page on the Google Play store.

How .com became a restricted TLD

Verisign has been given approval to start restricting who can and cannot register .com and .net domain names in various countries.
Customers of Chinese registrars are the first to be affected by the change to the registry’s back-end system, which was made last year.
ICANN last week gave Verisign a “free to deploy” notice for a new “Verification Code Extension” system that enables the company to stop domains registered via selected registrars from resolving unless the registrant’s identity has been verified and the name is not on China’s banned list.
It appears to be the system Verisign deployed in order to receive its Chinese government license to operate in China.
Under Verification Code Extension, Verisign uses ICANN records to identify which registrars are based in countries that have governmental restrictions. I believe China is currently the only affected country.
Those registrars are able to register domains normally, but Verisign will prevent the names from resolving (placing them in serverHold status and keeping them out of the zone file) unless the registration is accompanied by a verification code.
These codes are distributed to the affected registrars by at least two verification service providers. Verisign, in response to DI questions, declined to name them.
Under its “free to deploy” agreement with ICANN (pdf), Verisign is unable to offer verification services itself. It must use third parties.
The company added the functionality to its .com and .net registry as an option in February 2016, according to ICANN records. It seems to have been implemented last July.
A Verisign spokesperson said the company “has implemented” the system.
The Verification Code Extension — technically, it’s an extension to the EPP protocol pretty much all registries use — was outlined in a Registry Services Evaluation Process request (pdf) last May, and approved by ICANN not long after.
Verisign was approved to operate in China last August in the first wave of gTLD registries to obtain government licenses.
Under Chinese regulations, domain names registered in TLDs not approved by the government may not resolve. Registrars are obliged to verify the identities of their registrants and names containing certain sensitive terms are not permitted.
Other gTLDs, including .vip, .club, .xyz .site and .shop have been granted approval over the last few months.
Some have chosen to work with registration gateway providers in China to comply with the local rules.
Apart from XYZ.com and Verisign, no registry has sought ICANN approval for their particular implementation of Chinese law.
Because Chinese influence over ICANN is a politically sensitive issue right now, it should be pointed out that the Verification Code Extension is not something that ICANN came up with in response to Chinese demands.
Rather, it’s something Verisign came up with in response to Chinese market realities. ICANN has merely rubber-stamped a service requested by Verisign.
This, in other words, is a case of China flexing market muscle, not political muscle. Verisign, like many other gTLD registries, is over-exposed to the Chinese market.
It should also be pointed out for avoidance of doubt that the Chinese restrictions do not apply to customers of non-Chinese registrars.
However, it appears that Verisign now has a mechanism baked into its .com and .net registries that would make it much easier to implement .com restrictions that other governments might choose to put into their own legislation in future.

GMO and Radix secure Chinese gTLD approval

Kevin Murphy, January 3, 2017, Domain Registries

GMO Registry and Radix have won Chinese government approval for their respective new gTLDs .shop and .site.
It’s the second batch of foreign new gTLDs to get the nod from China’s Ministry of Industry and Information Technology, following .vip, .club and .xyz in early December.
They’re also the first two Asian registries from outside China to get the right to flog their domains in China — GMO is Japanese and Radix is UAE-based with Indian roots.
Their new Chinese government licenses mean Chinese registrars will now be able to allow their customers to actually use .shop and .site domains to host web sites.
The registries in turn have had to agree to enforce China’s rather arbitrary and Draconian censorship policies on their Chinese customers.
The approvals were announced by MIIT December 29.
.site currently has about 570,000 domains in its zone file, making it a top-10 new gTLD by volume, while .shop, which launched much more recently, has over 100,000.
The ability for Chinese customers to develop their domains is no doubt good for the long-term health of TLDs, but it’s not necessarily a harbinger of shorter-term growth in a market where domains are often treated little more than meaningless baseball cards to be traded rather than commodities with intrinsic value.