China could block GoDaddy’s $120 million MMX swoop

GoDaddy’s proposed $120 million acquisition of essentially all the meaningful assets of portfolio gTLD player MMX will be subject to Chinese government approval, it emerged this morning.

Following GoDaddy’s bare-bones press release announcing the deal last night, this morning MMX added a whole bunch of flesh, including a list of closing conditions, in its statement to shareholders.

GoDaddy is proposing to buy essentially MMX’s entire operating business — the 28 gTLD registry agreements with ICANN, including the four porn-related strings belonging to subsidiary ICM Registry.

Not only do MMX shareholders have to approve the deal — and holders of 64% of the shares have already promised they will — but ICANN approval will be required for the registry contracts to be reassigned.

This may prove a hurdle or delay if third parties raise competition concerns, but ICANN’s pretty opaque approval process generally doesn’t frown too much on industry consolidation.

Another known unknown is China.

MMX told shareholders that it needs: “Approval of Chinese authorities for the change of control of MMX China (including change of control in respect of relevant licenses held by MMX China permitting it to distribute TLDs in China).”

The reason for this is quite straightforward: in volume terms, quite a lot of MMX’s business has been in China in recent years. Popular sellers such as .vip, with over 800,000 names today, have been driven primarily by Chinese investors.

A local presence (in this case MMX China) and approval from the Ministry of Industry and Information Technology is required to legally sell a TLD to Chinese registrants via Chinese registrars.

I’ve no particular reason to believe MIIT will withhold its approval for MMX China to move into GoDaddy’s ownership, but a failure to get the nod from China appears to be a deal-breaker.

MMX’s statement to the markets this morning also provided some clarity on what exactly it is that GoDaddy is proposing to buy.

The gTLDs to be acquired are: .vip,.nrw, .casa, .vodka, .xxx, .fit, .miami, .fishing, .porn, .beer, .surf, .boston, .adult, .yoga, .garden, .abogado, .work, .fashion, .horse, .rodeo, .sex, .wedding, .luxe, .dds, .law, .bayern, .cooking, and .country.

It seems that when Tony Farrow took over as MMX CEO last year, after his predecessor left due to an accounting snafu, he had the portfolio audited and came to the conclusion that it could expect only pretty crappy growth over the coming years.

It had banked on selling expensive defensive trademark blocks in its four porn-themed gTLDs to big brands to make up the shortfall, but then GoDaddy approached in December brandishing its rather large checkbook.

MMX reckons the deal values the company at a 92% premium over its closing share price Tuesday, and 87% and 78% premiums over its 20-day and 90-day average selling price.

.bayern, .nrw and the four porn gTLDs belong to subsidiaries that GoDaddy will acquire outright, but GoDaddy is not proposing to buy MMX itself.

Rather, MMX will likely stay alive and publicly traded long enough to redistribute its cash windfall to investors and sell or wind down about a dozen non-operating subsidiaries.

It has a transition services agreement to manage certain business functions of the registry until January next year, which sounds a bit like what fellow GoDaddy acquisition .CLUB Domains explained to me last night.

After that, London’s Alternative Investment Market rules will treat MMX as a “cash shell”, and it will either have to acquire an operating business from somewhere or make itself the subject of a reverse takeover by a company looking for a quick way to the public markets.

CSC becomes first foreign registrar to get the China nod

It’s probably not the best time, politically, to be bragging about doing business in China, but CSC has nevertheless just announced that it’s been given the nod to act as a registrar in China.

The company claims to be the first non-Chinese registrar to be given an official government license to operate in the country, though many registries have obtained one over the last few years since harsh new regulations came into power.

Under the Chinese rules, web site owners need a license to operate, and they can only register domains from approved registrars in approved TLDs.

It’s basically a great big censorship tool, but it doesn’t seem to have stopped every Chinese citizen from registering domains via foreign-owed registrars.

CSC has a corporate client base, so it’s got more incentive than most to follow the rules to the letter.

“CSC’s success in becoming licensed as a foreign-owned registrar positions the company as a go-to resource for global organizations doing business in China,” the company said in a press release.

.wang cut off with Chinese red tape

The registry behind .wang and several Chinese-language gTLDs has seen its official registry web site blocked due to Chinese regulations.
Zodiac Registry, which also runs .商城, .八卦 and .网店 (“mail”, “gossip” and “shop”), has seen zodiacregistry.com intercepted by its web host and replaced with a placeholder message explaining that the site lacks the proper government license.

It seems to have happened relatively recently. Google’s cache shows results from the page resolving normally in late May.
Ironically, its host is Alibaba, which also happens to be its largest registrar partner.
There’s no suggestion that registry operations or registrants have been affected. Domain availability checks at registrars for Zodiac TLDs appear to be working as normal.
The downtime appears to be a configuration problem. Alibaba requires customers to submit their Internet Content Provider license number before it will allow their sites to resolve properly.
ICP licenses are part of China’s censorship regime, issued by the Ministry of Industry and Information Technology. They must be obtained by any Chinese web site that wants to operate in China.
Zodiac does in fact have such a license, which according to the MIIT web site is active on at least six other domains.
While zodiacregistry.com is the domain officially listed with IANA for the company, it also operates TLD-specific sites such as bagua.wang for the “gossip” registry. None of these have been affected by the licensing issue.
UPDATE June 12: The site is now back online as normal.

.icu gets China nod as it tops 900,000 regs

Chinese regulators have approved .icu for sale and use in China, according to the registry.
ShortDot COO Kevin Kopas told DI today that the Ministry of Industry and Information Technology has approved its year-old gTLD for mainland use.
The company plans to launch .icu there formally June 12, he said.
Kopas also said that .icu has recently topped 900,000 registrations.
It’s a remarkable growth achievement for a gTLD with barely a year on the clock, given that SpamHaus stats show that its level of spam abuse is still comparable to .com.
But with prices at around $1.50 at its largest registrars and very little semantic value, one has to assume that a lot of its registrations are speculative. Its first junk drop could be brutal.
MIIT approval may help it continue its growth trend. To date, China-based registrars have recorded no .icu sales.

Huge batch of Afilias TLDs approved in China

Seventeen Afilias-operated gTLDs have been approved for use in China.
The Ministry of Industry and Information Technology announced yesterday that the following Afilias-owned TLDs now have its official seal of approval: .archi, .bio, .black, .blue, .green, .lotto, .organic, .pet, .pink, .poker, .promo, .ski, .vote, .voto and .移动 (xn--6frz82g, means “mobile”),
Also approved are .asia and .网站 (.xn--5tzm5g means “website”), which to the best of my knowledge are not owned by Afilias but are quite closely managed by it.
All 17 were approved via the same Shanghai-based Afilias subsidiary, due to MIIT’s local presence requirements.
Chinese approval means Chinese registrants using Chinese registrars will be permitted to have their names resolve in China, subject to the country’s rather stringent censorship practices.
It’s the first batch of Afilias names to get the nod since April 2017, when .info, .pro and .mobi were approved.

Radix now has China approval for whole TLD stable

Radix’s entire portfolio of new gTLDs is now approved for sale and use in China, according to the company.

The company said today that .host, .press, .space and .website recently received the nod from the Ministry of Industry and Information Technology, which regulates the domain name space in China.

.fun, .site, .online, .tech and .store have all previously received approval.

Across the three-million-domain portfolio, over 700,000 are registered in China, according to Radix.

It saw growth in China over over 30% in 2018 in terms of new domain adds, the company said in a press release.

CEO Sandeep Ramchandani said that Radix has partnered with local registrar Xinnet to give free domains to university students to “host their academic projects and business prototypes.”

.cloud gets the China blessing

.cloud, run by Italian registry Aruba, has become the latest TLD to get the official nod to sell in China.
The blessing from the Ministry of Industry and Information Technology came at the end of October and the company announced it today.
The accreditation means .cloud domains sold to residents of the Chinese mainland will now be resolvable, and subject to China’s onerous censorship rules.
It’s the first Latin-script TLD to be approved by MIIT since July.
.cloud says it currently has 155,000 domains registered to customers in 180 countries.

Baidu gets Chinese approval for .baidu

It seems China’s Draconian licensing program for TLD registries is not limited to foreigners.
Chinese internet giant Baidu on Friday became the latest new gTLD registry operator to get the nod to run a TLD by the Ministry of Industry and Information Technology.
The approval was for .baidu, which is currently pre-launch with no launch plan on record.
Despite the brand match, it’s not technically a dot-brand gTLD — its ICANN contract has no Specification 13, which contains various carve-outs for single-registrant spaces.
While not particularly well-known in the English-speaking world, Baidu is second only to Google in terms of search engine market share, due to its dominance in China.
The company had 2017 revenue of almost CNY 85 billion ($12.5 billion).

MMX gets four more gTLDs approved for China use

MMX’s Chinese subsidiary has received the government nod for four more of its new gTLDs to operate in the country.
The approved strings are the lifestyle-oriented .fashion, .luxe, .yoga and .fit.
Getting the nod from the Ministry of Industry and Information Technology means Chinese registrants will be able to use domains in the the four gTLDs, albeit subject to China’s much more stringent censorship regime.
MIIT this week also approved .时尚, which is the Chinese version of .fashion, managed by Rise Victory, a subsidiary of Yuwei Registry.
.fashion, .fit and .yoga have about 40,000 domains in their zone files, combined, while .luxe does not yet have a launch date.
MMX has had some success in China with its flagship .vip TLD, which had over 884,000 domains under management at the last public count. It recently said preliminary second-quarter renewals there were a very respectable 75%.
It also recently that that .购物 (.shopping) and .law both went on sale in China, and “will be marketed by in-country specialists as high-value domain names”. Investors were advised not to expect high volumes.

.co first ccTLD to get China approval

Repurposed Colombian ccTLD .co has obtained official government approval to operate in China, according to a consultant whose client worked on the project.
Pinky Brand blogged this week that .co is the “first” foreign ccTLD to get the nod, among the raft of gTLDs that have gone down the same route over the last couple of years.
China’s own .cn and Chinese-script equivalents are of course already approved.
Under China’s policy regime, administered by the Ministry of Industry and Information Technology, TLD registries have to set up a local presence and agree to Draconian takedown policies.
Non-approved TLDs are not permitted to have resolving domains, under the rules.
Most companies seeking Chinese approval tend to use a local proxy provider such as ZDNS, which seems to be the route taken by .co here.
.co is managed by Neustar via its Colombian subsidiary .CO Internet.