Latest news of the domain name industry

Recent Posts

DotKids doesn’t want .kids auction to go ahead

Kevin Murphy, December 7, 2017, Domain Registries

One of the applicants for the .kids gTLD has asked ICANN to stop the planned last-resort auction.

DotKids Foundation is competing with Amazon for .kids and, because the two strings were ruled confusingly similar, with Google’s application for the singular .kid.

ICANN last month set a January 25 date for the three contenders to go to auction, having unfrozen DotKids’ application back in October.

DotKids’ bid had been put on hold due to it losing a Community Priority Evaluation — which found overwhelmingly that the organization did not represent a proper community — and its subsequent appeals of that ruling.

But the foundation now says that its application should be treated the same as .music, .gay, and a few others, which are currently on hold while ICANN waits for the results of a third-party review of the CPE process.

DotKids filed a Request for Reconsideration (pdf) with ICANN yesterday, immediately after being told that there were no plans to put the contention set back on hold.

Tomorrow is the deadline for the three applicants to submit their information to ICANN to participate in next month’s auction.

An ICANN last-resort auction sees the winning bid being placed in a fund for a yet-to-be-determined purpose, as opposed to private auctions where the losing bidders share the loot.

Donuts rolls the dice with $22.5 million .web lawsuit

Kevin Murphy, August 9, 2016, Domain Registries

Donuts is demanding ICANN pay up the $22.5 million it reckons it is owed from the auction of the .web gTLD, which sold late last month for $135 million.

The company yesterday amended its existing California lawsuit against ICANN to allege that Verisign tried to avoid regulatory scrutiny by secretly bankrolling successful bidder Nu Dot Co.

The updated complaint (pdf) reads:

VeriSign’s apparent acquisition of NDC’s application rights was an attempt to avoid allegations of anti-competitive conduct and antitrust violations in applying to operate the .WEB gTLD, which is widely viewed by industry analysts as the strongest competitor to the .COM and .NET gTLDs.

Donuts wants a minimum of $22.5 million, which is roughly what each of the six losing .web applicants would have received if the contention set had been resolved via private auction.

(I previously reported that number as $18.5 million, because I accidentally counted .webs applicant Vistaprint as losing .webs applicant, when in fact it won .webs, paying $1.)

The company’s claims are still based around the allegation that ICANN breached its duties by failing to root out Verisign as the puppet-master.

The complaint alleges breach of contract, negligence, unfair competition and other claims. It says:

ICANN allowed a third party to make an eleventh-hour end run around the application process to the detriment of Plaintiff, the other legitimate applicants for the .WEB gTLD and the Internet community at large.

ICANN intentionally failed to abide by its obligations to conduct a full and open investigation into NDC’s admission because it was in ICANN’s interest that the .WEB contention set be resolved by way of an ICANN auction.

The irony here is that Ruby Glen LLC, the Donuts company that applied for .web, is subject to an arrangement not dissimilar to NDC’s with Verisign.

Ruby Glen is owned by Covered TLD LLC, in turn a wholly-owned Donuts subsidiary.

It’s well-known that fellow portfolio registry Rightside has rights to acquire Covered TLD’s over 100 applied-for strings, but this is not disclosed in its .web application.

ICANN will no doubt make use of this fact when it files its answer to the complaint.

Verisign itself has not been added as a defendant, but much of the new text in the complaint focuses on its now-confirmed involvement with NDC. The suit reads:

Had VeriSign’s apparent acquisition of NDC’s application rights been fully disclosed to ICANN by NDC… the relationship would have also triggered heightened scrutiny of VeriSign’s Registry Agreements with ICANN for .COM and .NET, as well as its Cooperative Agreement with the Department of Commerce.

The fact that Verisign is allowed to collect over half a billion dollars cash every year as a result of its state-endorsed monopoly is a longstanding cause of embarrassment for the Department of Commerce.

It has taken an interest in regulating Verisign’s .com contract in the past — it’s the only reason Verisign has not been able to raise .com prices in the last few years.

But the US government is not a party to the .web contract (unlike .com, where it has a special relationship with Verisign) and is not involved in the new gTLD program’s management or policies.

The complaint also makes reference to a completely unrelated Independent Review Process declaration from last week, which slammed ICANN for its lack of accountability and transparency.

Donuts faces the additional problem that, like all new gTLD applicants, it signed a covenant not to sue ICANN when it applied for its new gTLDs.

A judge in the DotConnectAfrica v ICANN can has allowed that lawsuit to proceed, regardless, but it may prove a stumbling block for Donuts.

It all looks a bit flimsy to me, but I’ve learned not to second-guess American judges so we’ll just have to see how it plays out.

Verisign confirms it did fund $135 million .web bid

Kevin Murphy, August 1, 2016, Domain Registries

Verisign has just confirmed that it was behind the winning bid in last week’s .web gTLD auction.

Nu Dot Co won the auction after 23 rounds over two days of bidding, but Verisign was thought to be the real beneficiary.

The company has now released the following statement confirming the relationship:

The Company entered into an agreement with Nu Dot Co LLC wherein the Company provided funds for Nu Dot Co’s bid for the .web TLD. We are pleased that the Nu Dot Co bid was successful.

We anticipate that Nu Dot Co will execute the .web Registry Agreement with the Internet Corporation for Assigned Names and Numbers (ICANN) and will then seek to assign the Registry Agreement to Verisign upon consent from ICANN.

As the most experienced and reliable registry operator, Verisign is well-positioned to widely distribute .web. Our expertise, infrastructure, and partner relationships will enable us to quickly grow .web and establish it as an additional option for registrants worldwide in the growing TLD marketplace. Our track record of over 19 years of uninterrupted availability means that businesses and individuals using .web as their online identity can be confident of being reliably found online. And these users, along with our global distribution partners, will benefit from the many new domain name choices that .web will offer.

No big surprises there. Verisign had already told investors it had a $130 million payment coming up soon.

See DI’s analysis on the auction results here.

.web could already be a record-breaker as auction enters day two

Kevin Murphy, July 28, 2016, Domain Sales

It seems likely that .web has already smashed through the $41.5 million record sale price for a new gTLD at ICANN auction.

The auction, which kicked off properly at 1300 UTC yesterday, seems to have ended its first day of bidding at around 2300 UTC last night without a winner.

That suggests, based on the rules and how previous auctions have played out, that we’re probably already looking at high bids over $50 million.

The previous top price for a gTLD at ICANN auction was .shop, which sold to GMO for $41.5 million earlier this year.

The signs are that .web will go for more.

Be warned, this is mostly informed guesswork. I don’t know what the current bids are.

ICANN auctions work in rounds. In each round the minimum bid is either $1 (for round one) or the previous round’s maximum bid (for all subsequent rounds).

The maximum bid in each round is set by the auctioneer, who has broad discretion, based on the action at the time.

The range between minimum and maximum bids seems to get bigger in each passing round, based on previous auction results.

According to ICANN auction rules (pdf) each bidding round lasts 20 minutes and is immediately followed by a 20-minute recess.

This schedule is somewhat flexible. It could be slowed down or sped up with the consent of all bidders.

The .web auction was due to kick off at 1300 UTC yesterday, according to court papers, though it seems probable that round-one bids were accepted the previous night.

The first day’s bidding was due to end at 2330 UTC yesterday.

So that’s over 10 hours of bidding yesterday, which works out to about 15 rounds if they stuck to the 40-minute round schedule.

When .shop sold for $41.5 million, it did so in just 14 rounds, carried out in a single day.

The final round of that auction saw an acceptable bidding range of $36.8 million to $46 million — an almost $10 million spread.

So, if we can assume that there were at least 15 rounds in the .web auction yesterday and we can assume that the auctioneer is following a similar playbook to the .shop auction, the maximum bid when the auction paused overnight was likely well over $50 million.

By the time you read this, this guesswork could be moot anyway. I expect we’ll find out later today whether those assumptions were accurate. It seems unlikely that a third day’s bidding will be required.

The applicants for .web are NDC, Radix, Donuts, Schlund, Afilias, Google and Web.com. Vistaprint’s bid for .webs is also in the auction.

Donuts denied! .web auction to go ahead today

A California judge had denied Donuts’ eleventh-hour attempt to delay today’s .web gTLD auction.

In a ruling late yesterday, Judge Percy Anderson rejected the company’s request for an emergency temporary restraining order preventing ICANN from selling off the premium gTLD.

This means the auction is pretty much certain to go ahead starting at 1300 UTC — that’s 6am local time for ICANN — today.

Donuts had sought the TRO because it claims ICANN failed in its duty to investigate whether rival bidder Nu Dot Co is now backed by a new big-money controlling party.

Its ultimate goal appears to have been to somehow force .web to private settlement, where all the unsuccessful applicants could get a multi-million dollar pay-off.

Anderson dismissed the request for a multitude of largely technical legal reasons surrounding the timing of Donuts’ request.

He said that, had ICANN not already filed its opposition to the TRO, he would have ruled against Donuts simply for failure to formally serve ICANN in a timely fashion.

But on the merits, he ruled that there was not a strong likelihood of Donuts winning a full trial, due to the statements of two NDC executives, who swore on oath there had been no change to the company’s ownership or management.

Anderson wrote (pdf):

Based on the strength of ICANN’s evidence submitted in opposition to the Application for TRO, and the weakness of Plaintiff’s efforts to enforce vague terms contained in the ICANN bylaws and Applicant Guidebook, the Court concludes that Plaintiff has failed to establish that it is likely to succeed on the merits, raise serious issues, or show that the balance of hardships tips sharply in its favor on its breach of contract, breach of the implied covenant of good faith and fair dealing, and negligence claims. Moreover, because the results of the auction could be unwound, Plaintiff has not met its burden to establish that it will suffer irreparable harm in the absence of the preliminary injunctive relief it seeks. The Court additionally concludes that the public interest does not favor the postponement of the auction.

He did give Donuts leave to amend its request, but given that the auction is due to start today before California office/court hours, that courtesy seems moot.

It’s likely that by the end of the day we will know how much the .web, and possibly .webs, domains fetched. We’re certainly looking at eight figures for .web, in my view.

Some have guessed prices in the ballpark of $50 million, based on the $41.5 million paid for .shop earlier this year.

It seems at least seven of the eight applicants in the auction will be bidding blind, strategically speaking.

Circumstantial evidence suggests that NDC does indeed have one or more secret sugar daddies supporting its bid, insulated from public view by NDC’s corporate structure.

The applicants for .web are NDC, Radix, Donuts, Schlund, Afilias, Google and Web.com. Vistaprint’s bid for .webs is also in the auction.

ICANN currently has over $100 million in a bank account, segregated from its operating funds, from previous last-resort auctions.