The US Federal Trade Commission is still “looking at” ICANN’s new gTLD program amid concerns that most of the applicants applied defensively, it has emerged.
FTC chairman Jon Leibowitz also said today that he thinks new gTLDs will cause consumer confusion and lead to an increase in fraud.
“We have been very, very concerned about ICANN and their dramatic expansion of the domain names, which we think will cause consumer confusion and even worse lead to more areas where malefactors can hide from the law while defrauding consumers,” Leibowitz said.
“A lot of companies that have plunked down $185,000 per domain name — and there have been hundreds of companies that have done it — have mostly done it for defensive purposes,” he added.
Most new gTLDs are not dot-brands, so Leibowitz probably misspoke when he said that “most” applications are defensive. Within the subset of bids that are dot-brands, he may be on firmer ground.
His comments came during a press conference to discuss the FTC’s settlement of its competition probe of Google, which has itself applied for almost 100 new gTLDs.
The settlement agreement relates to Google’s search practices and not its gTLD applications.
Leibowitz said that the FTC is “not looking that issue [new gTLDs] with respect to Google, we’re looking at that issue with respect to ICANN”.
The FTC’s concerns about the program are not new, but it has not publicly expressed them recently.
In December 2011 the agency said the program could “magnify both the abuse of the domain name system and the corresponding challenges we encounter in tracking down Internet fraudsters.”
Why is ICANN so misunderstood?
That’s the question at the heart of a public comment period into concerns about “defensive” new generic top-level domain applications that the organization opened up last night.
ICANN wants to know why so many companies seem to think they’ll need to apply for a dot-brand gTLD even though they don’t want one.
there are reports that parties believe that they will need to submit defensive gTLD applications to protect their trademarks, regardless of whether they are interested in using or developing a gTLD.
ICANN seeks public comment on the sources of this perception and how it can be addressed.
The comment period serves three purposes — it’s designed to raise awareness about rights protection mechanisms as well as soliciting input about defensive applications.
It will also let ICANN show the US Congress, which is worried about this kind of thing, that it’s doing something to address the problem.
So why are so many people worried about the perceived need to defensively apply for dot-brands?
The main answer, I think, is pretty straightforward:
The Applicant Guidebook is 349 pages long.
Hardly anybody has read the damn thing, not even some of the “experts” that persist on appearing in the media to complain about numeric gTLDs or to confidently predict GE and LG will apply for dot-brands.
So what do people do? They get somebody else who has read it to explain what it means.
These somebody elses are either consultants and registry providers, which are financially incentivized to get companies to apply, or they’re organizations that want the whole program stopped, which are not above deliberately misrepresenting the rules in order to whip up outrage.
I’m not casting every consultant in the same light here, of course. Many will turn away business if it’s not a good fit, but let’s not pretend that there hasn’t been scaremongering.
And let’s remember that for most regular companies registering a domain name is not an opportunity, it’s a headache. It’s at best a minor irritation and at worst a costly shakedown.
That thinking has clearly translated into the new gTLD space.
Poorly informed people think they’re being asked to register a very expensive domain name, and in their experience registering a domain name is a defensive measure 99% of the time.
Because ICANN has spent the last six months painstakingly avoiding saying anything positive about new gTLDs, it’s been left to the consultants and registries to try to explain the opportunities.
They’re understandably looked on with suspicion, and not only because of the aforementioned distrust of the industry – this new gTLD thing is unproven and there’s a perception that previous gTLDs have “failed” because you don’t see a .biz every time you turn on the TV.
Anyway, speaking of shakedowns, DomainIncite PRO subscribers have access to an in-depth analysis of scenarios in which “defensive” applications may and may not be appropriate. Read it here.
The Association of National Advertisers is threatening legal action unless ICANN “abandons” its recently approved new generic top-level domains program.
Its CEO, Robert Liodice, has written to his ICANN counterpart Rod Beckstrom outlining its litany of concerns about new gTLDs.
ANA’s strongly worded arguments will be familiar territory for anyone who has been following development of the program for the last few years.
It’s worried about cybersquatting, typosquatting, phishing, as well as the cost of defensive registrations and post-launch trademark enforcement.
The organization represents 400 companies that collectively spend $250 billion every year on their brands, according to the letter.
It also claims that ICANN shirked its duties by failing to adequately consider the economic impact of the program, and that it failed to develop it in a transparent, bottom-up manner.
Liodice wrote (pdf), with my emphasis:
ICANN must not ignore the legitimate concerns of brand owners and the debilitating effect on consumer protection and healthy markets its unsupervised actions will cause. Should ICANN refuse to reconsider and adopt a program that takes into account the ANA’s concerns expressed in this letter, ICANN and the Program present the ANA and its members no choice but to do whatever is necessary to prevent implementation of the Program and raise the issues in appropriate forums that can consider the wisdom, propriety and legality of the program.
The letter ends with a bunch of legal blah about ANA’s rights and remedies, a pretty obvious indication that it’s considering its legal position.
ICANN should “abandon” the program until ANA’s concerns have been addressed, Liodice wrote.
That’s not going to happen, of course.
There’s no way ICANN can put a halt to the program without basically admitting ANA’s analysis of it has merit.
If ANA wants to stop new gTLDs from going ahead, it’s going to need to do more than send a letter.
The letter is CC’d to the US Department of Commerce and several Congressmen, which suggests that we may see another Congressional hearing into the program before too long.
But will we see a lawsuit as well?
ICANN, at least, has anticipated the likelihood of having to defend itself in court for some time.
About 30% of the the $185,000 application fee – $30 million in a 500-application round – is allocated to various “risks”, of which a legal defense fund is one component.
I’d be surprised if ICANN’s legal team hasn’t war-gamed potential claims and defenses every time the Applicant Guidebook has been updated.
The next five months are going to be very interesting times.