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Last resort gTLD auction loser wants share of $5m winning bid

Kevin Murphy, December 10, 2014, Domain Registries

An unsuccessful new gTLD applicant wants ICANN to share the proceeds of its “last resort” auction with itself and the other losing applicants.

Aesthetics Practitioners Advisory Network had applied for .salon, but found itself in a contention set with three other applicants and was ultimately beaten at auction by a winning bid of over $5 million from Donuts.

Now, the company has written to ICANN to ask for the money from the ICANN-run auction to be shared out among the losing bidders in much the same way as it is when a contention set goes to private auction.

APAN CEO Tina Viney wrote (pdf):

On the basis that ICANN received such a large amount ($5.175million) for the bidding of this auction it would be fair and equitable for the losing parties to be considered in the distribution of the winning financial bid. We believe that ICANN should review this consideration for losing parties who have had to incur numerous costs, not just the application fee, but also toward the preparation of documents so that we could meet with ICANN’s requirements. These include, but are not limited to registry fees, solicitor’s fees, financial services, not to mention the enormous amount of time that is required of an applicant in preparing for their application.

As a result, we respectfully request ICANN as part of their funds distribution policy to consider the applicants who did not win at the auction, BUT WERE SUCCESSFUL IN PASSING THE EVALUATION PROCESS.

She said that private auctions, which allow losing applicants to recoup some or all of their costs, should be mandatory when a majority of the applicants in a contention set want one.

In .salon’s case, one of the four applicants didn’t agree to a private auction, according to Viney. As Donuts is the enthusiastic pioneer of the private auction concept, that means the holdout was either DaySmart Software or L’Oreal.

Google beaten to .dot for a paltry $700k

Kevin Murphy, November 20, 2014, Domain Registries

Dish DBS, a US satellite TV company, has beaten Google to the .dot new gTLD in an ICANN auction that fetched just $700,000.

It’s further proof, if any were needed, that you don’t need to have the big bucks to beat Google at auction.

Dish plans to use .dot as a single-registrant space, but unusually it’s not a dot-brand. According to its application, the company:

intends to utilize the .dot gTLD to create a restricted, exclusively-controlled online environment for customers and other business partners with the goal of further securing the collection and transmission of personal and other confidential data required for contracted services and other product-related activities.

Google had planned an open, anything-goes space.

.dot was the only new gTLD contention set to be resolved by ICANN last-resort auction this month. The other applicants scheduled for the November auctions all settled their contests privately.

gTLD auctions net ICANN another $13m

Kevin Murphy, October 27, 2014, Domain Registries

ICANN has raised another $12.9 million from new gTLD auctions.

A small batch of three contention sets — .realty, .salon and .spot — were resolved last Wednesday in the third so-called “last resort” auction.

.realty went to Fegistry for $5,588,888, .salon to Donuts for $5,100,575 and .spot to Amazon for $2.2 million.

ICANN now has accumulated new gTLD auction sales totaling $27.8 million.

It raised $14.3 million selling off .buy, .tech and .vip in September. The auction for .信息 fetched $600,000 in June.

ICANN’s share — after auctioneer Power Auctions is paid off — is being put into a special fund, rather that ICANN’s current account. The community will one day have to decide what to spend it on.

Second last-resort gTLD auction raises $14.3m

Kevin Murphy, September 18, 2014, Domain Registries

ICANN has raised $14.3 million auctioning off three new gTLDs — .buy, .tech and .vip.

It was the second batch of “last resort” auctions, managed by ICANN and Power Auctions, in which the winning bids are placed in a special ICANN fund.

Notably, while Google participated in all three auctions, it failed to win any, setting a reassuring precedent for any smaller applicants that are set to face the deep-pocketed giant in future auctions.

.tech was the biggest-seller, fetching $6,760,000 after nine rounds of bidding.

The winner was Dot Tech LLC, which beat Google, Minds + Machines, Donuts, NU DOT CO, and Uniregistry.

.buy went to Amazon for $4,588,888, beating Google, Donuts and Famous Four Media. The bidding lasted seven rounds.

Finally, .vip sold to Minds + Machines for $3,000,888 after Google, Donuts, I-Registry and VIP Registry dropped out.

The prices are in the same ball-park as we’ve inferred from previous, private auctions managed by Applicant Auction (a company affiliated with Power Auctions).

That’s notable because the first last resort auction, for .信息, fetched just $600,000 when it sold to Amazon back in June.

As far as we can tell, last-resort auctions do not necessarily keep prices low, even though the losing bidders in this week’s auctions will have walked away empty-handed.

In private auctions, losers leave holding a share of the winner’s bid.

This week, most of the $14.3 million raised will go into a special ICANN fund.

Akram Atallah, president of ICANN’s Global Domains Division said in a statement:

The proceeds from these Auctions will be separated and reserved until the Board determines a plan for the appropriate use of the funds through consultation with the community. We continue to encourage parties to reach agreements amongst themselves to resolve contention.

The ICANN community has been chatting about possible uses for auction funds for years.

Ideas such as subsidizing new gTLD applicants from poorer nations in future rounds and investing in internet infrastructure in the developing world have been floated.

Contention questions remain as ICANN reveals “last-resort” auction rules

Kevin Murphy, November 2, 2013, Domain Policy

ICANN has published a first draft of the rules for its “last resort” new gTLD auctions, but they do not yet address the contention created by controversial objection rulings.

The organization has hired Power Auctions to write the rules and manage the auctions.

They’ve agreed upon an “ascending clock” style, where the auctioneer sets upper and lower limits for each round of bidding. Applicants must bid within that range or withdraw — they cannot skip rounds.

A bid at the top of the round’s range is a “continue bid” that sees the applicant through to the next round. Lower, and it’s an “exit bid” that will count as a withdrawal if anyone else submits a higher bid.

When all but one applicants have withdrawn, the remaining applicant gets the gTLD, paying ICANN an amount equal to the highest exit bid submitted by a competitor in that round.

Unlike the private auctions that have been taking place for the last few months, losing applicants walk away empty-handed apart from a small application fee refund from ICANN.

Applicants’ bidding limits will be determined by their deposits. If your deposit is under $2 million, your bid ceiling is 10x your deposit, but if you put down $2 million deposit or more, there would be no upper limit.

It all seems fairly straightforward for direct, single-string contention sets.

Where it starts to get fuzzy is when you start thinking about “indirect” contention and multiple, connected auctions running simultaneously.

It’s a little tricky to explain indirect contention without diagrams, but let’s try an example, using .shop, instead.

There are nine applicants for .shop. These are all in direct contention with each other.

But one .shop applicant, Commercial Connect, won objections against applicants for “similar” strings — Amazon’s .通販 and Donuts’ .shopping.

Assuming ICANN upholds these objection findings, which seems increasingly likely given recent statements from generic domains president Akram Atallah, both .shopping and .通販 will be in direct contention with Commercial Connect’s .shop and in indirect contention with all the other .shop applications.

Complicating matters, while Amazon’s .通販 is uncontested, Donuts’ .shopping is also in direct contention with Uniregistry, which applied for the same string but did not lose an objection.

It will be quite possible for .shop, .shopping and .通販 to all be delegated, but only if Commercial Connect loses the auction for .shop or otherwise withdraws from the race.

The auction materials published by ICANN today are a bit fuzzy on what happens when indirect contention is in play. On the one hand it suggests that multiple applications can win an auction:

When a sufficient number of applications have exited the auction process, so that the remaining application(s) are no longer in contention with one another, and all the relevant string(s) can be delegated as gTLDs, the auction will be deemed concluded.

But the rules also say:

the rules set forth within this document will assume that there is direct contention only, a condition that holds for the substantial majority of Auctions. In the event that an Auction will include a Contention Set that does not satisfy this condition, ICANN or the Auction Manager may issue an Addendum to the Auction Rules to address indirect contention.

While it seems that the auctions for .shop, .shopping and .通販 would have to take place simultaneously due to the indirect contention, some weird edge cases have me confused.

ICANN’s list of indirect contention sets is currently empty.

It’s not at all clear to me yet whether, for example, Donuts’ .shopping application would be placed in the .shop auction or whether two separate auctions would be conducted.

That could be important because deposits — and therefore bidding limits — are specific to each auction.

Would Donuts have to stump up $4 million in deposits, rather than $2 million, just in order to win one string? Would Commercial Connect have to put down $6 million for three auctions for one string?

If the two .shopping applicants are placed in the .shop auction, and Commercial Connect withdraws first, would Donuts have to carry on bidding against the other eight .shop applicants, just to win .shopping?

I’m guessing not, but the rules don’t seem to envisage this scenario yet.

What about Uniregistry, which has an application for .shopping? Will ICANN force it into the .shop auction even though it’s not in direct contention with any .shop applicant?

If .shop and .shopping are two separate auctions, what happens if Commercial Connect withdraws from the .shop auction but not the .shopping auction? It would have little to gain — not being a .shopping applicant — but could it artificially bid up the .shopping set?

And could how these auctions play out have an impact on companies’ objection strategies in future rounds?

If Uniregistry, say, finds itself at a disadvantage because its .shopping competitor Donuts was objected to by Commercial Connect, maybe it would make sense for an entire direct contention set to cooperate to fight off an objection from an applicant for a similar string.

And if Commercial Connect finds itself financially hobbled by having to participate in three auctions rather than one, maybe that will discourage applicants from filing massive amounts of objections in future.

And another thing…

If you’re as confused as I am, ICANN is running a webinar November 7 at 2200 UTC in order to answer (hopefully) these kinds of questions.