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As ICANN meets to decide .org’s fate, California AG says billion-dollar deal must be rejected

Kevin Murphy, April 16, 2020, Domain Policy

California Attorney General Xavier Becerra has urged ICANN to deny approval of Ethos Capital’s $1.13 billion acquisition of .org manager Public Interest Registry.

The call came in a letter (pdf) dated yesterday, just a day before ICANN’s board of directors was scheduled to meet to discuss the deal.

Becerra, who started looking into the deal in late January, wrote, right out of the gate:

I urge ICANN to reject the transfer of control over the .ORG registry to Ethos Capital. The proposed transfer raises serious concerns that cannot be overlooked.

Chief among his concerns is the fact that ICANN originally granted PIR the right to run .org largely because it was a non-profit with a committment to serve non-profits. He wrote:

If, as proposed, Ethos Capital is permitted to purchase PIR, it will no longer have the unique characteristics that ICANN valued at the time that it selected PIR as the nonprofit to be responsible for the .ORG registry. In effect, what is at stake is the transfer of the world’s second largest registry to a for-profit private equity firm that, by design, exists to profit from millions of nonprofit and non-commercial organizations

He’s also bothered about the lack of transparency about who Ethos is and what its plans are. The proposed new owners of PIR are hidden behind a complex hierarchy of dummy LLCs, and Ethos has so far refused to name its money men or to specify what additional services it might offer to boost its revenue.

Becerra also doesn’t buy the business plan, which would see PIR required to pay off a $300 million loan and, as a newly converted for-profit entity, start paying taxes.

He’s particularly scathing about the fact that ICANN approved the removal of PIR’s price caps last year despite receiving over 3,000 public comments opposing the changes and only half a dozen in favor.

“There is mounting concern that ICANN is no longer responsive to the needs of its stakeholders,” he writes.

Despite saying he “will take whatever action necessary to protect Californians and the nonprofit community”, Becerra does not specify what remedies are available to him.

But it looks like ICANN faces the risk of legal action no matter which way its board of directors votes (or voted) today.

Its current deadline to make a decision is April 20.

Whois privacy talks in Bizarro World as governments and trademark owners urge coronavirus delay

Kevin Murphy, April 15, 2020, Domain Policy

Coronavirus may have claimed another victim at ICANN — closure on talks designed to reopen private Whois data to the likes of law enforcement and trademark owners.

In a remarkable U-turn, the Governmental Advisory Committee, which has lit a series a fires under ICANN’s feet on this issue for over a year, late last week urged that the so-called Expedited Policy Development Process on Whois should not wrap up its work in June as currently planned.

This would mean that access to Whois data, rendered largely redacted worldwide since May 2018 due to the GDPR regulation in Europe, won’t be restored to those who want it as quickly as they’ve consistently said that they want it.

Surprisingly (or perhaps not), pro-access groups including the Intellectual Property Constituency and Business Constituency sided with the GAC’s request.

In an email to the EPDP working group’s mailing list on Thursday, GAC chair Manal Ismail indicated that governments simply don’t have the capacity to deal with the issue due to the coronavirus pandemic:

In light of the COVID-19 pandemic, and its drastic consequences on governments, organizations, private sector and individuals worldwide, I would like to express our serious concerns, as GAC leaders, that maintaining the current pace of work towards completion of Phase 2 by mid-June could jeopardize the delivery, efficacy and legitimacy of the EPDP’s policy recommendations.

While recognizing that the GAC has continually advised for swiftly completing policy development and implementing agreed policy on this critical public policy matter, we believe that given the current global health emergency, which puts many in the EPDP and the community under unprecedented stress (for example governments has been called to heightened duties for the continuity of essential public services), pressing important deliberations and decisions in such a short time frame on already strained participants would mean unacceptably sacrificing the product for the timeline.

We understand there are budget and human resources considerations involved in the completion of Phase 2 of the EPDP. However, we are all living through a global health pandemic, so we call on the EPDP Team to seriously reassess its course and expectations (be it on the duration of its calls, the turn-around time of reviews, its ultimate timeline and budget) emulating what numerous governments, global organizations, and households are doing to adapt during these challenging times across the world.

In April last year, before the EPDP group had even formally started its current phase of talks, Ismail wrote to ICANN to say the GAC expected the discussions to be more or less wrapped up by last November and that the new policy be implemented by this April.

Proponents of the access model such as Facebook have taken to suing registrars for not handing over Whois data in recent months, impressing the need for the issue to be urgently resolved.

So to now request a delay beyond June is a pretty big U-turn.

While Ismail later retracted her request for delay last Thursday, it was nevertheless discussed by the working group that same day, where the IPC, the BC and the ALAC all expressed support for the GAC’s position.

The registrars and registries, the non-commercial users and the ISPs were not supportive.

Delay might be tricky. For starters, hard-sought neutral working group chair Janis Karklins, has said he can’t continue working on the project beyond June 30, and the group has not secured ICANN funding for any further extensions to its work.

It will be up to the GNSO Council to decide whether to grant the extension, and the ICANN board to decide on funding.

The working group decided on Thursday to ask the Council for guidance on how to proceed.

What’s worrying about the request, or at least the IPC and BC’s support of it, is that coronavirus may just be being deployed as an excuse to extend talks because the IP owners don’t like the proposal currently on the table.

“The reality is we’re looking at a result that is… just not going to be sufficient from our perspective,” MPAA lawyer Frank Journoud, an IPC rep on the working group, said on its Thursday call. “We don’t want the perfect to be the enemy of the good, but right now we’re not even going to get to good.”

The current state of play with the working group is that it published its initial report (pdf) for public comment in February.

The group is recommending something called SSAD, for Standardized System for Access and Disclosure, in which a central gateway provider, possibly ICANN itself, would be responsible for granting Whois access credentials and fielding requests to the relevant registries and registries.

The almost 70 comments submitted before the March 23 deadline have been published in an unreadable, eye-fucking Google spreadsheet upon which transparency-loving ICANN may as well have hung a “Beware of the Leopard” sign. The staff summary of the comments is currently nine days late.

Kuala Lumpur meeting cancelled and ICANN 68 could be even trickier online

Kevin Murphy, April 9, 2020, Domain Policy

ICANN has as expected cancelled its in-person ICANN 68 meeting, which had been due to take place in Kuala Lumpur in June, due to the coronavirus pandemic.

The decision, which was never really in any doubt, was taken by its board of directors yesterday. The board considered:

Globally, a high number of people are under some form of a “stay at home” or lock-down order, directed to avoid contact with others except to receive essential services such as medical care or to purchase supplies. Schools and offices are closed, gatherings are prohibited, and international travel is largely on pause. We do not know when travel or in-person meetings will be authorized or possible. As it relates to Kuala Lumpur, Malaysia has a Movement Control Order in force at least until 14 April 2020 that prohibits meetings such as ICANN68. The duration of the Movement Control Order has already been extended once.

It appears that the four-day meeting, which will instead go ahead virtually (presumably on the Zoom conferencing service) might be even more disjointed than ICANN 67.

ICANN 67, which took place online in March, did have a centralized component — a bunch of ICANN staffers on location at its headquarters in Los Angeles — but that may not be possible this time around.

The board said that “due to current social distancing requirements, ICANN org is unable to execute a virtual meeting from a single location, and that a decentralized execution model might necessitate changes to the format.”

It added that there is support for “a flexible, modified virtual meeting format that focuses on cross-community dialogues on key policy topics, supplemented by a program of topical webinars and regular online working meetings scheduled around the key sessions.”

While there has been a lot of criticism of the Zoom platform in recent weeks due to security and privacy concerns, ICANN indicated this week that it’s not particularly concerned and will carry on using the service.

No ICANN tax relief for Chinese registrars

ICANN has declined a request from dozens Chinese registrars for a fee waiver due to the impact of coronavirus.

In February, almost 50 China-based accredited registries and registrars said they were suffering financially as a result of the outbreak and asked ICANN for an “immediate fee waiver” to “greatly help stabilize our business in the difficult time”.

ICANN has denied this request. In a letter (pdf), senior director of gTLD accounts and services Russ Weinstein wrote:

While we sympathize with the potential financial impact this unprecedented event may have on contracted parties, we are not prepared to provide a waiver at this time. We are closely monitoring the situation and its impact on the domain industry. We are interested in hearing more from representatives from the contracted parties to better understand the problems both the contracted parties and the registrants are facing and ideas for potential solutions.

As I said back in February, what was then largely a Chinese problem looked likely to quickly become a global problem, which unfortunately seems to be the course we’re on. Just six weeks later, China isn’t even the worst-affected country any more.

Even without fee waivers, ICANN has noted that it expects a “significant” impact on it is 2020-21 budget due to the pandemic.

ICANN declares coronavirus a “natural disaster” to protect expired domains

Registrants unable to renew their domain names when they expire may not lose them, following a decree from ICANN today.

The organization has declared the coronavirus a “natural disaster” and invoked part of the Registrar Accreditation Agreement that permits registrars to keep hold of domains that have come to the end of their post-expiration renewal period.

Under the RAA, registrars have to delete domains a maximum of 45 days after the reg period expires, unless there are “extenuating circumstances” such as an ongoing UDRP case, lawsuit or technical stability dangers.

There’s no accounting for natural disasters in the contract, but ICANN has the discretion to name any “other circumstance as approved specifically by ICANN” an extenuating circumstance. That’s what it’s done here.

It’s invoked this provision once before, following Hurricane Maria in late 2017.

ICANN said that policies to specifically protect domains in the event of natural disasters should be considered.

The new coronavirus exception applies to all registrars in all gTLDs, although implementation will vary by registrar.

The announcement follows Verisign’s announcement last week that it is waiving its registry-level restore fee for .com and .net domains until June 1.

Ethos clarifies .org price rises, promises to reveal number of censored domains

Public Interest Registry and would-be owner Ethos Capital have slightly revised the set of promises they hope to keep if ICANN approves the $1.13 billion acquisition.

Notably, in updating their proposed Public Interest Commitments (pdf), they’ve set out in plain dollar terms for the first time the maximum annual price PIR would charge for a .org domain over the coming seven years.

Applicable Maximum FeeTime Period
$9.93June 30, 2019 to June 29, 2020
$10.92June 30, 2020 to June 29, 2021
$12.02June 30, 2021 to June 29, 2022
$13.22June 30, 2022 to June 29, 2023
$14.54June 30, 2023 to June 29, 2024
$15.99June 30, 2024 to June 29, 2025
$17.59June 30, 2025 to June 29, 2026
$19.35June 30, 2026 to June 29, 2027

Previous versions of the PICs just included a formula and invited the reader to do the math(s).

The two companies are proposing to scrap price caps altogether after June 2027.

If ICANN rejects the deal, under its current contract PIR would be free to raise its prices willy-nilly from day one, though some believe it would be less likely to do so under its current ownership by the non-profit Internet Society.

The new PICs also include a nod to those who believe that PIR would become less sensitive to issues like free speech and censorship — perhaps because China may lean on Ethos’ shadowy billionaire backers. The document now states:

Registry Operator will produce and publish annually a report… This report will also include a transparency report setting forth the number of .ORG domain name registrations that have been suspended or terminated by Registry Operator during the preceding year under Registry Operator’s Anti-Abuse Policy or pursuant to court order.

A few other tweaks clarify the launch date and composition of its proposed Stewardship Council, a body made up of expert outsiders that would offer policy guidance and have a veto on issues such as changes to .org censorship and privacy policy.

The PICs now ban family members of people working for PIR from sitting on the council, and clarify that it would have to be up and running six months after the acquisition closes.

Because .org is not a gTLD applied for in 2012, the PICs do not appear to be open for public comment, but post-acquisition changes to the document would be.

ICANN currently plans to approve or deny the acquisition request by April 20, just 11 days from now.

End of the road for Neustar as GoDaddy U-turns again and buys out its registry biz

GoDaddy has changed its mind about the registry side of the industry yet again, and has acquired the business of Neustar, one of the largest and oldest registries.

The deal will see GoDaddy purchase, for an undisclosed sum, all of Neustar’s registry assets, amounting to 215 TLDs and about 12 million domains.

It means the gTLD .biz is now under the new GoDaddy Registry umbrella, as are the contracts to run the ccTLDs .us, .in, and .co, 130 dot-brand gTLDs and 70 open gTLDs.

Neustar’s registry staff are also being taken on.

“We’re bringing the whole team aboard. One of the things we’re very excited about is bringing the team aboard,” Andrew Low Ah Kee, GoDaddy’s chief operating officer, told DI today.

He added that, due to coronavirus job insecurities wracking many minds right now, GoDaddy has promised its entire workforce that there will be no layoffs in the second quarter.

Nicolai Bezsonoff, currently senior VP of Neustar’s registry business, will run the new unit. He said for him the opportunity for “innovation” was at the heart of the deal.

“We’ve always been one step removed from the customer, so it can be hard to understand what customer wants to do,” he said. “This gives us huge customer insight into what customers want and how they want to use domains.”

Pressed for hypothetical examples of innovation, Bezsonoff floated ideas about selling domains for partial-year periods, or doing more to crack down on DNS abuse.

The deal is an example of “vertical integration”, which has been controversial due to the potential risk of a dominant registry playing favorites with its in-house registrar, or vice versa.

While registries such as Donuts, CentralNic and until recently Uniregistry vertically integrated with little complaint, the industry is currently nervous about Verisign’s newfound ability under its ICANN contract to own and run a registrar.

Because GoDaddy is the Verisign — the runaway market leader — of the registrar side of the industry, one might expect this deal (expected to close this quarter) to get more scrutiny than most.

But the company says it’s going to “strictly adhere to a governance model that maintains independence between the GoDaddy registry and registrar businesses”.

Low Ah Kee said that this means the registry and registrar “won’t share any information that gives or appears to given any unfair advantage” to the GoDaddy registrar, that their business performance will be assessed separately, and that they’ll be audited to make sure they’re not breaking this separation.

If GoDaddy appears to be preemptively expecting criticism, there’s a good reason why: the proposed acquisition of .org manager PIR by private equity group Ethos Capital has caused huge upset in recent months, and there are some parallels here.

First, like .org, pricing restrictions were lifted in Neustar’s .biz under a contract renewal with ICANN last year. It fell under the radar a little as .biz is substantially smaller, not a legacy gTLD as such, and not widely used.

Like the .org deal, the transfer of control of .biz will also be subject to ICANN’s approval before GoDaddy and Neustar can seal the deal.

Could we be looking at another big public fight over a gTLD acquisition?

But unlike Ethos with .org, GoDaddy says it has no intention of raising prices with .biz.

“We will not be raising prices, in fact we will look into reducing prices for some TLDs,” Bezsonoff said.

One TLD where one assumes prices won’t be going down is .co, where Neustar has just had its margins massively slashed by the Colombian government.

The acquisition was announced just days after the Colombian government announced that it has renewed its contract with Neustar to run .co for another five years, but under financial terms hugely more favorable to itself.

Whereas the initial 10-year term saw the government being paid 6% to 7% of the .co take, that number has soared to 81%, making .co — arguably Neustar’s registry crown jewel — a substantially less-attractive TLD to manage.

One assumes that the acquisition price would have fluctuated wildly based on the outcome of the .co renegotiation, but the GoDaddy/Neustar execs I talked to today didn’t want to talk about terms.

GoDaddy’s history with the registry side of the business has been changeable.

As far as ICANN contract is concerned, it is already a registry because it owns the .godaddy dot-brand. But that’s currently unused, with the registry functions outsourced to — cough — Neustar’s arch-rival Afilias.

Given Neustar’s religious devotion to the dot-brand concept, and the weirdness of using one of your primary competitors for a key function, one might expect both of those situations to change.

GoDaddy did also apply for .casa and .home back in 2012, but changed its mind and abandoned both bids fairly early in the process.

The sudden excitement about the registry business today begs the question of why GoDaddy didn’t buy Uniregistry’s registry business at the same time as it bought its secondary market and registrar earlier this year, but apparently it was not for sale.

Following the acquisition, Neustar is keeping its DNS resolution services and GoDaddy will continue to use them, so Neustar is not entirely out of the domain game, but it looks like the end of the road for Neustar as a brand I regularly report on.

The registry started life in 2000 as “NeuLevel”, a joint-venture between Neustar and Aussie registrar Melbourne IT formed to apply to ICANN for new gTLDs. It wanted .web, but got .biz, which now has about 1.7 million names under management, down from a 2014 peak of 2.7 million.

ICANN to consider cancelling ICANN 68 tomorrow

Kevin Murphy, April 7, 2020, Domain Policy

ICANN is to consider whether to cancel its in-person ICANN 68 gathering at a meeting of its board of directors tomorrow.

The agenda for its meeting tomorrow has one line item: “Impact of COVID-19 on ICANN68”.

The four-day Policy Forum is currently scheduled to take place from June 22 in Kuala Lumpur, Malaysia.

I think the chances of this event going ahead in the midst of the coronavirus pandemic are zero point zero.

March’s ICANN 67 meeting was replaced with a series of virtual Zoom rooms on February 19, when cases of Covid-19 had been reported in just 26 countries and it was still widely thought of as a Chinese problem.

According to today’s data from the European Centre For Disease Prevention and Control, coronavirus cases have been reported in 204 countries and territories. That’s pretty much all of them.

Even if some currently hard-hit countries in North America and Europe are over the hump by June, you can guarantee that somewhere in the world there’ll be a horrific Biblical epidemic going on. I can’t see ICANN taking the risk of opening its doors to the world at a time like that.

Frankly, I think ICANN 69, the annual general meeting slated for Hamburg in October, has a big question mark hanging over it as well.

Germany may have been handling its crisis relatively well compared to other nations, but ICANN has participants from 150 countries and it may well have to make its call based not on the strongest national response but the weakest.

ICANN expects “significant” budget impact from coronavirus

Kevin Murphy, April 7, 2020, Domain Policy

The ongoing coronavirus pandemic is expected to have a “significant” impact on ICANN’s budget, according to an update from the organization.

The organization published its expectations of a $140.4 million budget for the fiscal year that begins this July last December, and opened it up for public comments.

In its summary of those comments (pdf), which had a February 25 deadline and therefore were not focused on the pandemic’s potential impact, ICANN said:

the COVID-19 pandemic is affecting significantly the entire world. ICANN expects that its activities and financial position will be significantly impacted as well. The ICANN org is working with the Board to assess and monitor the potential impact to ICANN’s funding, and planned work such as face-to-face meetings, travel, etc.

Any pandemic-related changes to the budget will be published prior to board approval, ICANN said.

So where is ICANN expecting the impact? It’s not entirely clear. I would expect to see some minor gains from slashing its travel budget in the wake of social distance rules, but it’s less obvious where a “significant” shortfall could occur.

ICANN had operational revenue — the money it gets from billing registries and registrars — of $136.8 million in the fiscal year ending June 30, 2019, its most recently reported year (pdf).

Of that total, roughly $56 million came from the market leaders in both segments, Verisign and GoDaddy, both of which have been given glowing analyst coverage since the outbreak began.

One commentator recently wrote that Verisign is “immune” from coronavirus and GoDaddy’s CFO told analysts just last week that he expects the impact of coronavirus to be “minimal” in the first quarter. That could of course change in future.

Almost half of ICANN’s revenue, some $65.7 million, comes from the top 10 registries and registrars.

So is ICANN expecting to see weakness in the long tail, the few thousand accredited registrars and gTLD registries that account for under $1 million in ICANN contributions per year? Is it expecting reduced voluntary contributions from the ccTLDs and Regional Internet Registries?

Will coronavirus cause huge numbers of small businesses to abandon their domains as they go out of business? Will it inspire large numbers of the recently unemployed and quarantined to start up web-based businesses in an attempt to put food on the table? Will it cause large portfolio owners to downsize to save costs?

All of these outcomes seem possible, but these are unprecedented times, and I couldn’t being to guess how it will play out.

ICANN’s number two Cyrus Namazi quits. Probably due to sexual discrimination claims.

Kevin Murphy, April 1, 2020, Domain Policy

The head of ICANN’s Global Domains Division, Cyrus Namazi — arguably ICANN’s number-two exec — has resigned from the organization, according to multiple sources. I believe it’s related to allegations of sexual discrimination.

ICANN staffers were told this evening that he’s resigned “effective immediately” and that a public announcement will follow.

Long-time ICANN staffer Theresa Swinehart, currently senior VP of multistakeholder strategy and strategic initiatives, will run GDD while a replacement is sought.

While I don’t expect ICANN to announce the reasons for Namazi’s departure, I believe it’s related to allegations of sexual indiscretions.

I’ve been aware for a few months of allegations against Namazi for sexual discrimination and/or sexual harassment, but I’ve been unable to get sufficient on-the-record information to run a story.

What I do know, from digging around on court web sites, is that ICANN was sued about a year ago by a former staffer called Jennifer Gore for alleged disability and gender discrimination, allegedly carried out by Namazi.

Gore’s complaint can be read here (pdf). ICANN’s response can be read here (pdf).

I’ve also been made aware of a few other female ICANN staffers who have quit allegedly due to Namazi’s behavior.

And I gather he’s been on-leave recently. Anyone who was at ICANN 67 will have noted his absence.

I’ve not heard of any allegations that could be described as remotely criminal. We’re just talking about allegations of inappropriate comments and actions at work.

I have absolutely no idea how many of the allegations, if any, are true. None. I just know that there are a lot of them.

I do know that ICANN’s PR team have been banned from talking to me for the last few weeks, since I learned about these allegations — by senior VP of global communications Sally Newell Cohen — because I talked offensive smack about Namazi to him and to another senior staffer on social media messaging channels.