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ICANN board meets to consider PIR acquisition TODAY

Kevin Murphy, November 21, 2019, Domain Policy

ICANN’s board of directors will gather today to consider whether the acquisition of Public Interest Registry by a private equity company means that it should reverse its own decision to allow PIR to raise .org prices arbitrarily.

Don’t get too excited. It looks like it’s largely a process formality that won’t lead to any big reversals, at least in the short term.

But I’ve also learned that the controversy could ultimately be heading to an Independent Review Process case, the final form of appeal under ICANN rules.

The board is due to meet today with just two named agenda items: Reconsideration Request 19-2 and Reconsideration Request 19-3.

Those are the appeals filed by the registrar Namecheap in July and rights group the Electronic Frontier Foundation in August.

Namecheap and EFF respectively wanted ICANN to reverse its decisions to remove PIR’s 10%-a-year price-raising caps and to oblige the registry to enforce the Uniform Rapid Suspension anti-cybersquatting policy.

Both parties now claim that the sale by the Internet Society of PIR to private equity firm Ethos Capital, announced last week, casts new light on the .org contract renewal.

The deal means PIR will change from being a non-profit to being a commercial venture, though PIR says it will stick to its founding principles of supporting the non-profit community.

I reported a couple of weeks ago that the board had thrown out both RfRs, but it turns out that was not technically correct.

The full ICANN board did in fact consider both appeals, but it was doing so in only a “preliminary” fashion, according to an ICANN spokesperson. ICANN told me:

On 3 November the Board considered “proposed determinations” for both reconsideration request 19-2 and 19-3. In essence, the Board was taking up the Board Accountability Mechanism Committee (BAMC) role, as the BAMC had not been able to reach quorum in early November due to certain recusals by BAMC members.

Once the Board adopted the proposed determinations (in lieu of the BAMC issuing a recommendation to the Board) the parties that submitted the reconsideration requests had 15 days to submit a rebuttal, for the Board’s full consideration of the matter, which is now on the agenda.

Normally, RfRs are considered first by the four-person BAMC, but in this case three of the members — Sarah Deutsch, Nigel Roberts, and Becky Burr — recused themselves out of the fear of appearing to present conflicts of interest.

The committee obviously failed to hit a quorum, so the full board took over its remit to give the RfRs their first pass.

The board decided that there had been no oversights or wrongdoing. Reconsideration always presents a high bar for requestors. The .org contract was negotiated, commented on, approved, and signed completely in compliance with ICANN’s governing rules, the board decided.

But the ICANN bylaws allow for a 15-day period following a BAMC recommendation during which rejected RfR appellants can submit a rebuttal.

And, guess what, both of them did just that, and both rebuttals raise the PIR acquisition as a key reason ICANN should think again about the .org contract changes.

The acquisition was announced a week ago, and it appears to have come as much of a surprise to ICANN as to everyone else. It’s a new fact that the ICANN board has not previously taken into account when considering the two RfRs, which could prove important.

Namecheap reckons that the deal means that PIR is now almost certain to raise .org prices. New gTLD registry Donuts was bough by Ethos affiliate Abry Partners last year, and this year set about raising prices across the large majority of its 200-odd gTLDs. Namecheap wrote in its rebuttal:

Within months of be acquired by Abry Partners, it raised prices in 2019 for 220 out of its 241 TLDs. Any statements by PIR now to not raise prices unreasonably are just words, and without price caps, there is no way that .org registrants are not used a source to generate revenue for acquisitions or to pay dividends to its shareholders.

It also said:

The timing and the nature of this entire process is suspicious, and in a well-regulated industry, would draw significant scrutiny from regulators. For ICANN not to scrutinize this transaction closely in a completely transparent and accountable fashion (including public disclosure of pertinent information regarding the nature, cost, the terms of any debt associated with the acquisition, timeline of all parties involved, and the principals involved) would demonstrate that ICANN org and the ICANN Board do not function as a trusted or reliable internet steward.

Namecheap also takes issue with the fact that ICANN’s ruling on its RfR (pdf) draws heavily on a 2009 economic analysis by Professor Dennis Carlton, which concluded that price caps were unnecessary in the new gTLD program.

The registrar trashes this analysis as being based on more opinion than fact, and says it is based on outdated market data.

Meanwhile, the EFF’s rebuttal makes the acquisition one of four reasons why it thinks ICANN should reverse course. It said;

ICANN must carefully reexamine the .ORG Registry Agreement in light of this news. Without the oversight and participation of the nonprofit community, measures that give the registry authority to institute new [Rights Protection Mechanisms] or make other major policy changes invite management decisions that conflict with the needs of the .ORG community.

Quite often, RfRs are declined by ICANN because the requestor does not present any new information that the board has not already considered. But in this case, the fact of the PIR acquisition is empirically new information, as it’s only week-old news.

Will this help Namecheap and the EFF with their cause? The board will certainly have to consider this new information, but I still think it’s unlikely that it will change its mind.

But I’ve also learned that Namecheap has filed with ICANN to trigger a Cooperative Engagement Process procedure.

The CEP is an often-lengthy bilateral process where ICANN and an aggrieved party attempt to resolve their differences in closed-door talks.

When CEP fails, it often leads to an Independent Review Process complaint, when both sides lawyer up and three retired judges are roped in to adjudicate. These typically cost both sides hundreds of thousands of dollars in legal fees.

CEP and IRP cases are usually measured in years rather than months, so the PIR acquisition could be under scrutiny for a long time to come.

Yanks beat Aussies to accountancy gTLD

Kevin Murphy, February 20, 2019, Domain Registries

The contention set for .cpa has been resolved, clearing the way for a new accountancy-themed gTLD.

The winner is the American Institute of Certified Public Accountants, which submitted two bids for the string — one “community”, one vanilla, both overtly defensive in nature — back in 2012.

Its main rival, CPA Australia, which also applied on a community basis, withdrew its application two weeks ago.

Commercial registries Google, MMX and Donuts all have withdrawn their applications since late December, leaving only the two AICPA applications remaining.

This week, AICPA withdrew its community application, leaving its regular “single registrant” bid the winner.

AICPA is the US professional standards body for accountants, CPA Australia is the equivalent organization in Australia. ACIPA has 418,000 members, CPA Australia has 150,000.

Both groups failed their Community Priority Evaluations back in 2015 on the basis that their communities were tightly restricted to their own membership, and therefore too restrictive.

AICPA later amended its community application to permit CPAs belonging to non-US trade groups to register.

Both organizations were caught up in the CPE review that also entangled and delayed the likes of .music and .gay. They’ve also both appealed to ICANN with multiple Requests for Reconsideration and Cooperative Engagement Process engagements.

CPA Australia evidently threw in the towel after a December 14 resolution of ICANN’s Board Accountability Mechanisms Committee decision to throw out its latest RfR. It quit its CEP January 9.

It’s likely a private resolution of the set, perhaps an auction, occurred in December.

The winning application from AICPA states fairly unambiguously that the body has little appetite for actually running .cpa as a gTLD:

The main reasons for which AICPA submits this application for the .cpa gTLD is that it wants to prevent third parties from securing the TLD that is identical to AICPA’s highly distinctive and reputable trademark

So don’t get too excited if you’re an accountant champing at the bit for a .cpa domain. It’s going to be an unbelievably restrictive TLD, according to the application, with AICPA likely owning all the domains for years after delegation.

The internet is about to get a lot gayer

Kevin Murphy, February 20, 2019, Domain Registries

Seven years after four companies applied for the .gay top-level domain, we finally have a winner.

Three applicants, including the community-driven bid that has been fighting ICANN for exclusive recognition for years, this week withdrew their applications, leaving Top Level Design the prevailing bidder.

Top Level Design is the Portland, Oregon registry that already runs .ink, .design and .wiki.

The withdrawing applicants are fellow portfolio registries Donuts and MMX, and community applicant dotgay LLC, which had been the main holdout preventing the contention set being resolved.

I do not yet know how the settlement was reached, but it smells very much like a private auction.

As a contention set only goes to auction with consent of all the applicants, it seems rather like it came about after dotgay finally threw in the towel.

dotgay was the only applicant to apply as a formal “community”, a special class of applicant under ICANN rules that gives a no-auction path to delegation if a rigorous set of tests can be surmounted.

Under dotgay’s plan, registrants would have to have been verified gay or gay-friendly before they could register a .gay domain, which never sat right with me.

The other applicants, Top Level Design included, all proposed open, unrestricted TLDs.

dotgay, which had huge amounts of support from gay rights groups, failed its Community Priority Evaluation in late 2014. The panel of Economist Intelligence Unit experts awarded it 10 out the 16 available points, short of the 14-point prevailing threshold.

Basically, the EIU said dotgay’s applicant wasn’t gay enough, largely because its definition of “gay” was considered overly broad, comprising the entire LGBTQIA+ community, including non-gay people.

After dotgay appealed, ICANN a few months later overturned the CPE ruling on a technicality.

A rerun of the CPE in October 2015 led to dotgay’s bid being awarded exactly the same failing score as a year earlier, leading to more dotgay appeals.

The .gay set was also held up by an ICANN investigation into the fairness of the CPE process as carried out by the EIU, which unsurprisingly found that everything was just hunky-dory.

The company in 2016 tried crowdfunding to raise $360,000 to fund its appeal, but after a few weeks had raised little more than a hundred bucks.

Since October 2017, dotgay has been in ICANN’s Cooperative Engagement Process, a form of negotiation designed to avert a formal, expensive, Independent Review Process appeal, and the contention set had been on hold.

The company evidently decided it made more sense to cut its losses by submitting to an auction it had little chance of winning, rather than spend six or seven figures on a lengthy IRP in which it had no guarantee of prevailing.

Top Level Design, in its application, says it wants to create “the most safe, secure, and prideful .gay TLD possible” and that it is largely targeting “gay and queer people as well as those individuals that are involved in supporting gay cultures, such as advocacy, outreach, and civil rights.”

But, let’s face it, there’s going to be a hell of a lot of porn in there too.

There’s no mention in the winning bid of any specific policies to counter the abuse, such as cyberbullying or overt homophobia, that .gay is very likely to attract.

Top Level Design is likely to take .gay to launch in the back end of the year.

The settlement of the contention set is also good news for two publicly traded London companies.

MMX presumably stands to get a one-off revenue boost (I’m guessing in seven figures) from losing another auction, while CentralNic, Top Level Design’s chosen back-end registry provider, will see the benefits on an ongoing basis.

Donuts backs away from .spa fight

Kevin Murphy, November 26, 2018, Domain Registries

Donuts has finally admitted defeat in its long-running fight to run the .spa gTLD, withdrawing its application and leaving rival Asia Spa and Wellness Promotion Council the victor.

ASWPC, run from Hong Kong by .asia’s Edmon Chung, has now entered into contracting with ICANN.

The company had won a Community Priority Evaluation back in 2015, with a passing score of 14 out of 16, which Donuts has been challenging ever since.

Donuts and ICANN were in a so-called Cooperative Engagement Process, a form of informal arbitration designed to stave off a more expensive Independent Review Process fight, from January 2016 until this month.

This meant ASWPC has been sitting twiddling its thumbs, unable to sign its contract or launch its TLD, for the better part of three years.

It’s not clear why Donuts decided not to go to a full-blown IRP. The company declined to comment for this article.

As a community applicant, the company had the backing of hundreds of spas worldwide.

It also had the backing of the Belgian government, which was important because spas are (little-known fact alert!) named after the tiny Belgian town of Spa.

It is believed that ASWPC promised up to 25% of its profits to Spa in order to gain this backing, but only from domains registered by Belgian, Dutch, Luxembourgish, French or German registrants.

Donuts loses to ICANN in $135 million .web auction appeal

Kevin Murphy, October 16, 2018, Domain Registries

Donuts has lost a legal appeal against ICANN in its fight to prevent Verisign running the .web gTLD.

A California court ruled yesterday that a lower court was correct when it ruled almost two years ago that Donuts had signed away its right to sue ICANN, like all gTLD applicants.

The judges ruled that the lower District Court had “properly dismissed” Donuts’ complaint, and that the covenant not to sue in the Applicant Guidebook is not “unconscionable”.

Key in their thinking was the fact that ICANN has an Independent Review Process in place that Donuts could use to continue its fight against the .web outcome.

The lawsuit was filed by Donuts subsidiary Ruby Glen in July 2016, shortly before .web was due to go to an ICANN-managed last-resort auction.

Donuts and many others believed at the time that one applicant, Nu Dot Co, was being secretly bankrolled by a player with much deeper pockets, and it wanted the auction postponed and ICANN to reveal the identity of this backer.

Donuts lost its request for a restraining order.

The auction went ahead, and NDC won with a bid of $135 million, which subsequently was confirmed to have been covertly funded by Verisign.

Donuts then quickly amended its complaint to include claims of negligence, breach of contract and other violations, as it sought $22.5 million from ICANN.

That’s roughly how much it would have received as a losing bidder had the .web contention set been settled privately and NDC still submitted a $135 million bid.

As it stands, ICANN has the $135 million.

That complaint was also rejected, with the District Court disagreeing with earlier precedent in the .africa case and saying that the covenant not to sue is enforceable.

The Appeals Court has now agreed, so unless Donuts has other legal appeals open to it, the .web fight will be settled using ICANN mechanisms.

The ruling does not mean ICANN can go ahead and delegate .web to Verisign.

The .web contention set is currently “on-hold” because Afilias, the second-place bidder in the auction, has since June been in a so-called Cooperative Engagement Process with ICANN.

CEP is a semi-formal negotiation-phase precursor to a full-blown IRP filing, which now seems much more likely to go ahead following the court’s ruling.

The appeals court ruling has not yet been published by ICANN, but it can be viewed here (pdf).

The court heard arguments from Donuts and ICANN lawyers on October 9, the same day that DI revealed that ICANN Global Domains Division president Akram Atallah had been hired by Donuts as its new CEO.

A recording of the 32-minute hearing can be viewed on YouTube here or embedded below.