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Amazon offered $5 million of free Kindles for .amazon gTLD

Kevin Murphy, October 23, 2018, Domain Policy

Amazon offered South American governments $5 million worth of free Kindles, content and cloud services in exchange for their endorsement of its .amazon gTLD application, it has emerged.

The proposal, made in February, also included an offer of four years of free hosting up to a value of $1 million.

The sweeteners came during negotiations with the eight governments of the Amazon Cooperation Treaty Organization, which object to .amazon because they think it would infringe on their geographical and cultural rights.

Amazon has sought to reassure these governments that it will reserve culturally sensitive strings of their choice in .amazon, and that it will actively support any future applications for gTLDs such as .amazonas, which is the more meaningful geographic string in local languages.

I’ve reported on these offers before, but to my knowledge the offer of free Kindles and AWS credits has not been made public before. (UPDATE: Nope.)

According to a September letter from ACTO, published (pdf) this week, Amazon told it:

as an indication of goodwill and support for the people and governments of the Amazonian Region… [Amazon will] make available to the OTCA governments credits for the use of AWS services, Kindles preloaded with mutually agreed upon content, and similar Amazon.com services and products in an amount not to exceed $5,000,000.

Amazon also offered to set up a .amazon web site “to support the Amazonian people’s cultural heritage” and pay up to $1 million to host it for four years.

These kinds of financial sweeteners would not be without precedent.

The applicant for .bar wound up offering to donate $100,000 to fund a school in Montenegro, after the government noted the string match with the Bar region of the country.

The ACTO countries met in August to consider Amazon’s offer, but chose not to accept it.

However, they’re not closing off talks altogether. Instead, they’ve taken up ICANN on its offer to act as a facilitator of talks between Amazon and ACTO members.

The ICANN board of directors passed a resolution last month instructing CEO Goran Marby to “support the development of a solution” that would involve “sharing the use of those top-level domains with the ACTO member states”.

ACTO secretary general Jacqueline Mendoza has responded positively to this resolution (pdf) and invited Marby to ACTO headquarters in Brasilia to carry on these talks.

Co-founder Nevett leaves Donuts

Kevin Murphy, October 18, 2018, Domain Registries

Donuts executive vice president of corporate affairs Jon Nevett has left the company, Donuts said yesterday.

He’s the last of the four co-founders of the new gTLD portfolio owner to step aside from their original roles over the last couple of years.

There’s no word on whether he’s got a new gig lined up, but given the recent acquisition of Donuts by Abry Partners, which gave the founders the opportunity to dispose of their shares, Nevett presumably will be in no rush.

Donuts said in a statement that Nevett, who led policy at the company, will continue to act as an advisor.

He follows Dan Schindler and Richard Tindal as co-founders who have since left the company.

Founding CEO Paul Stahura stepped into the executive chair role a couple of years ago to make way for Bruce Jaffe, who led the firm through its merger with Rightside and subsequent sale to Abry.

Jaffe himself will leave next month to allow former ICANN bigwig Akram Atallah into the hot seat. Former ICANN CEO Fadi Chehade is one of Abry’s lead overseers of Donuts.

Donuts loses to ICANN in $135 million .web auction appeal

Kevin Murphy, October 16, 2018, Domain Registries

Donuts has lost a legal appeal against ICANN in its fight to prevent Verisign running the .web gTLD.

A California court ruled yesterday that a lower court was correct when it ruled almost two years ago that Donuts had signed away its right to sue ICANN, like all gTLD applicants.

The judges ruled that the lower District Court had “properly dismissed” Donuts’ complaint, and that the covenant not to sue in the Applicant Guidebook is not “unconscionable”.

Key in their thinking was the fact that ICANN has an Independent Review Process in place that Donuts could use to continue its fight against the .web outcome.

The lawsuit was filed by Donuts subsidiary Ruby Glen in July 2016, shortly before .web was due to go to an ICANN-managed last-resort auction.

Donuts and many others believed at the time that one applicant, Nu Dot Co, was being secretly bankrolled by a player with much deeper pockets, and it wanted the auction postponed and ICANN to reveal the identity of this backer.

Donuts lost its request for a restraining order.

The auction went ahead, and NDC won with a bid of $135 million, which subsequently was confirmed to have been covertly funded by Verisign.

Donuts then quickly amended its complaint to include claims of negligence, breach of contract and other violations, as it sought $22.5 million from ICANN.

That’s roughly how much it would have received as a losing bidder had the .web contention set been settled privately and NDC still submitted a $135 million bid.

As it stands, ICANN has the $135 million.

That complaint was also rejected, with the District Court disagreeing with earlier precedent in the .africa case and saying that the covenant not to sue is enforceable.

The Appeals Court has now agreed, so unless Donuts has other legal appeals open to it, the .web fight will be settled using ICANN mechanisms.

The ruling does not mean ICANN can go ahead and delegate .web to Verisign.

The .web contention set is currently “on-hold” because Afilias, the second-place bidder in the auction, has since June been in a so-called Cooperative Engagement Process with ICANN.

CEP is a semi-formal negotiation-phase precursor to a full-blown IRP filing, which now seems much more likely to go ahead following the court’s ruling.

The appeals court ruling has not yet been published by ICANN, but it can be viewed here (pdf).

The court heard arguments from Donuts and ICANN lawyers on October 9, the same day that DI revealed that ICANN Global Domains Division president Akram Atallah had been hired by Donuts as its new CEO.

A recording of the 32-minute hearing can be viewed on YouTube here or embedded below.

ICANN says it can spend quarter-billion-dollar auction fund however it likes

Kevin Murphy, October 12, 2018, Domain Policy

ICANN can tap into its $236 million new gTLD auction fund whenever it wants, and there’s nothing the community can do about it, according to its board of directors.

The board this week said it has a “legal and fiduciary responsibility” over the money, and would be obliged to spend the cash to meet ICANN’s obligations if it ever needed to.

The statement came in a letter to the leaders of a community working group that this week published a set of preliminary recommendations (pdf) for how the money should be distributed.

The group — a cross-community working group or CCWG — laid out a few options for how the money should be administered, either by ICANN alone or in conjunction with a charitable third party, and distributed.

The money was collected from new gTLD applicants that participated in ICANN’s “last-resort” auctions to settle their contention sets. Over half of the money came from Verisign’s winning bid for .web, which is still being contested.

The CCWG said that the money should be used to:

  • Benefit the development, distribution, evolution and structures/projects that support the Internet’s unique identifier systems;
  • Benefit capacity building and underserved populations, and;
  • Benefit the open and interoperable Internet

But the CCWG could not agree among itself whether ICANN Org or community groups such as the GNSO or GAC should be able to grab some of the cash, which is currently held in a special fund, separated from ICANN’s operational budget.

The group asked the board for its opinion, and the board responded (pdf):

ICANN maintains legal and fiduciary responsibility over the funds, and the directors and officers have an obligation to protect the organization through the use of available resources. In such a case, while ICANN would not be required to apply for the proceeds, the directors and officers would have a fiduciary obligation to use the funds to meet the organization’s obligations.

In other words: it doesn’t matter what rules you put in place, it’s our money and we’re duty-bound to spend it if we have to.

The board added, however, that ICANN Org “currently does not foresee a situation where it would need to apply for the proceeds”.

ICANN is pretty well-funded. It would have to hit hard times indeed before it needed to crack open the auction nest egg.

The board also said that supporting organizations and advisory committees would not be able to apply for funding because they’re not legal entities and wouldn’t pass the due diligence.

The CCWG’s initial report is now open for public comment until November 27.

Google abandons its .kid gTLD bid

Kevin Murphy, October 10, 2018, Domain Registries

Google has retreated from the interminable three-way battle for the .kids/.kid gTLDs.

The company this week withdrew its application for .kid, leaving the fight for .kids a two-horse race between Amazon and the not-for-profit DotKids Foundation.

Google’s application was intertwined with the two .kids applications due to a String Confusion Objection, which it won, drawing its bid into contention with DotKids and Amazon.

The contention set was, and arguably still is, due to be settled by an ICANN last-resort auction, but has been repeatedly postponed due to appeals to ICANN by DotKids, which doesn’t think it has the financial clout to beat its rivals.

Most recently, the auction was put on ice again after DotKids asked for ICANN money, then filed a Request for Reconsideration when ICANN refused.

Google’s .kid application had proposed an area for “kid-friendly content”. Registrants would have been vetted in advance of their domains going live to ensure they were established providers of such content.

ICANN number two Atallah is new CEO of Donuts

Kevin Murphy, October 9, 2018, Domain Registries

Akram Atallah, head of ICANN’s Global Domains Division, has quit and joined Donuts as its new CEO, DI has learned.

According to multiple sources, Atallah’s last day at ICANN was yesterday.

While neither company has announced the move yet, I gather that ICANN staff were informed by CEO Goran Marby today.

The news comes just a month after private equity firm Abry Partners, which counts former ICANN CEO Fadi Chehade among its partners, acquired Donuts for an undisclosed sum.

While the revolving door between industry and ICANN is pretty much continuous, Atallah is probably the highest-profile example since Kurt Pritz in 2012 and Peter Dengate Thrush in 2011.

As head of ICANN GDD, he was responsible for all things gTLD. Before the creation of the role, he was COO.

He was also interim president and CEO of the organization on two occasions, keeping the seat warm prior to the arrival of Chehade and Marby,

Atallah and Chehade also worked together in their pre-ICANN days in the software industry.

Donuts is of course the largest new gTLD registry in terms of TLDs, with 241 in its stable.

I’ve no word yet on where Bruce Jaffe, Donuts’ current CEO, is going, but I’ll update this post when I do.

Jaffe joined Donuts as chief a little over a year ago, replacing founder Paul Stahura.

Presumably, Jaffe was the turnaround guy and with Donuts’ acquisition secured the new owners figured it was time to hire an ops guy.

UPDATE 2022 UTC: Donuts just issued a press release in which it said that Jaffe will remain a senior adviser during the transition. It also said that Atallah starts in his new job November 12.

UPDATE October 10: ICANN said in a statement overnight that VP of DNS industry engagement Cyrus Namazi will head GDD on an interim basis, with support from CTO David Conrad.

ICANN blocks .islam after government veto

Kevin Murphy, October 8, 2018, Domain Policy

After six years, ICANN has finally killed off the applications for the new gTLDs .islam and .halal, due to objections from several governments.

It has also rejected the application for .persiangulf from the same applicant.

The decisions were made by the ICANN board of directors last Wednesday. The resolutions were published Friday night.

The board said: “it is apparent that the vast majority of the Muslim community (more than 1.6 billion members) object to the applications for .HALAL and .ISLAM.”

This actually means that the Organization of Islamic Cooperation, the 57-nation treaty group with a combined 1.6 billion nominal Muslim citizens, objected to the applications.

Several governments with large Muslim populations — including the UAE, Malaysia, Turkey, India and Iran — had also individually told ICANN on the record that they were not happy.

The view from these governments seemed to be that if there’s going to be a .islam, it should be run under the umbrella of a group such as the OIC, rather than some random tuppenny ha’penny gTLD registry.

In Christianity, the comparable gTLD .catholic is run by an affiliate of the world’s oldest pedophile ring, while .bible is being run as a propaganda tool by a group of sexually repressed, homophobic American evangelicals.

The ICANN board said its decision to reject .islam and .halal was in tune with its “core values” to protect the “public interest”.

The decision was based “on its consideration of and commitment to ICANN’s Mission and core values set forth in the Bylaws, including ensuring that this decision is in the best interest of the Internet community and that it respects the concerns raised by the majority of the community most impacted by the proposed .HALAL and .ISLAM gTLDs”.

It’s been avoiding making this decision since at least December 2013.

But it has now voted that the two applications “should not proceed”. It does not appear to have banned organizations from applying for the strings in subsequent application rounds.

The applicant for .islam and .halal was Turkey-based Asia Green IT System. It applications have been “on-hold” since the GAC issued non-consensus advice against them back in April 2013.

The OIC filed Community Objections against both gTLDs with the International Chamber of Commerce, but failed on both counts.

Having failed to see any progress, in December 2015, AGIT filed an Independent Review Process appeal against its treatment by ICANN, and won.

The November 2017 IRP decision held that the “on-hold” status was a “new policy”, unilaterally put in place by ICANN Org, that unfairly condemned AGIT’s applications to indefinite limbo.

The panel ordered ICANN to make its damn mind up one way or the other and pay about $270,000 in costs.

While rejecting the applications may not seem unreasonable, it’s an important example of a minority group of governments getting an essential veto over a gTLD.

Under the rules of the 2012 application round, consensus GAC advice against an application is enough to kill it stone dead.

But the GAC had merely said (pdf):

The GAC recognizes that Religious terms are sensitive issues. Some GAC members have raised sensitivities on the applications that relate to Islamic terms, specifically .islam and .halal. The GAC members concerned have noted that the applications for .islam and .halal lack community involvement and support. It is the view of these GAC members that these applications should not proceed.

That’s non-consensus advice, which is expected to initiate bilateral engagement with ICANN’s board before a decision is made.

In the case of .persiangulf, also applied for by AGIT and also now rejected, the GAC didn’t even give non-consensus advice.

In fact, in its July 2013 Durban communique (pdf) is explicitly stated it “does not object to them proceeding”.

This appears to have been a not atypical GAC screw-up. The minutes of the Durban meeting, published months later, showed that the Gulf Cooperation Council states had in fact objected — there’s a bit of a dispute in that part of the world about whether it’s the “Persian Gulf” or “Arabian Gulf” — so the GAC would have been within its rights to publish non-consensus advice.

This all came out when the GCC filed its own IRP against ICANN, which it won.

The IRP panel in that case ordered ICANN to outright reject .persiangulf. Two years later, it now has.

While the three gTLDs in question are now going into “Will Not Proceed” status, that may not be the end of the story. One “Will Not Proceed” applicant, DotConnectAfrica, has taken ICANN to court in the US over its .africa application.

CentralNic buys .fans for peanuts

Kevin Murphy, October 8, 2018, Domain Registries

CentralNic has acquired the flailing new gTLD .fans for an undisclosed sum.

The value of the deal was low enough that publicly traded CentralNic was not obliged to disclose the purchase to the market, CEO Ben Crawford confirmed.

The ICANN contract seems to have changed hands — transferred to a CentralNic subsidiary call Fans TLD Ltd — back in August.

We revealed back in May that CentralNic was acting as a caretaker for .fans, and sister TLD .fan, after original registry Asiamix Digital failed to make enough money to keep the business going.

.fan, which Asiamix bought from Donuts but never launched, was sold back to Donuts in June.

Donuts took .fan to sunrise last week and plans to take it to general availability in December.

.fans domains, meanwhile, have been in registrar storefronts since 2015, but the current tally of registered domains is barely above 1,600.

Domains are still selling for around the $100 mark, roughly double the expected retail price of .fan.

MMX waving goodbye to .london? Boss puts focus on renewal profits, China

Kevin Murphy, September 26, 2018, Domain Registries

MMX’s revenue from domain renewals could cover all of its expenses within the next 24 months, if everything goes to plan, according to CEO Toby Hall.

Hall was speaking to DI this evening after the company reported its first-half financial results, which saw revenue up 22% to $6.4 million and a net loss of $14.7 million, which compared to a loss of $526,000 a year earlier.

MMX’s huge loss for the period was largely — to the tune of $11.8 million — attributable to the restructuring of an “onerous” contract with one of its gTLD partners.

Hall refuses point blank to name that partner, but for reasons I discussed last year, I believe it is .london sponsor London & Partners, which is affiliated with the office of the Mayor of London.

When L&P selected MMX to be its registry partner for .london back in 2012, I understand a key reason was MMX’s promise to pay L&P a fixed annual fee and commit to a certain amount of marketing spend.

But two years ago, after it became clear that .london sales were coming in waaaay below previous management’s expectations, MMX renegotiated the deal.

Under the new deal, instead of committing to spend $10.8 million on marketing the TLD itself, MMX agreed to give half that amount to L&P for L&P to do its own marketing.

It appears that L&P has already spunked much of that cash ineffectively, or, as MMX put it:

a significant portion of that marketing budget has been spent by the partner with minimal impact on revenues in the current year and no expectation of any material uplift in future periods

MMX seems to have basically written off the .london deal as a bad call, and now that MMX is no longer in the registry back-end or registrar businesses, it seems unlikely that the .london partnership will be extended when it expires in three years.

Again, Hall would not confirm this bad contract was for .london — I’m making an informed guess — but the alternatives are limited. The only other TLDs MMX runs in partnership currently are .review and .country, and not even 2012 MMX management would have bet the farm on those turkeys.

Another $2.1 million of the company’s H1 net loss is for “bad debt provisions” relating the possibility that certain US-based registrar partners may not pay their dues, but this provision is apparently related to a new accounting standard rather than known deadbeats threatening to withhold payments.

If you throw aside all of this accountancy and look at the “operating EBITDA” line, profit was up 176% to $661,000 compared to H1 2017.

While the loss may have cast a cloud over the first half, Hall is upbeat about MMX’s prospects, and it’s all about the renewals.

“Renewal revenue will be more than all the costs of business within 24 months,” he said. To get there, it needs to cross the $12 million mark.

He told DI tonight that “an increasing percentage of our business is based on renewals… just on renewal revenue alone we’ll be over $10 million this year”.

Renewal revenue was $4.7 million in 2017 and $2.4 million in 2016, he said. In the first half, it was was up 40% to $3.4 million.

MMX’s acquisition of porn domain specialist ICM Registry, which has renewal fees of over $60 per year, will certainly help the company towards its 2018 goal in the second half. ICM only contributed two weeks of revenue — $250,000 — in H1.

Remarkably, and somewhat counter-intuitively, the company is also seeing renewal strength in China.

Its .vip gTLD, which sells almost exclusively in China, saw extremely respectable renewals of 76% in the first half, which runs against the conventional wisdom that China is a volatile market

Hall said that .vip renewals run in the $5 to $10 range, so apparently TLD volume is not being propped up by cheap wholesale renewal fees. The TLD accounts for about 30% of MMX’s renewal revenue, Hall said.

About 60% of .vip’s domains under management are with Chinese registrar Alibaba. The biggest non-Chinese registrar is GoDaddy, with about 3% of the namespace.

More exposure to China, and specifically Alibaba, is expected to come soon due to MMX’s repurposing of the 2012-logic gTLD .luxe, which is being integrated into the Ethereum blockchain.

MMX said last week that some six million (mostly Chinese) users of the imToken Ethereum wallet will in November get the ability to register .luxe domains via imToken and easily integrate them with their Ethereum assets.

The announcement was made at the Alibaba Cloud Computing Conference in China last week, so you can probably guess imToken’s registrar of choice.

Chutzpah alert! DotKids wants ICANN handout to fight gTLD auction

Kevin Murphy, September 24, 2018, Domain Policy

New gTLD applicant DotKids Foundation has asked ICANN for money to help it fight for .kids in an auction against Amazon and Google.

The not-for-profit was the only new gTLD applicant back in 2012 to meet the criteria for ICANN’s Applicant Support Program, meaning its application fee was reduced by $138,000 to just $47,000.

Now, DotKids reckons ICANN has a duty to carry on financially supporting it through the “later stages of the process” — namely, an auction with two of the world’s top three most-valuable companies.

The organization even suggests that ICANN dip into its original $2 million allocation to support the program to help fund its bids.

Because .kids is slated for a “last resort” auction, an ICANN-funded winning bid would be immediately returned to ICANN, minus auction provider fees.

It’s a ludicrously, hilariously ballsy move by the applicant, which is headed by DotAsia CEO Edmon Chung.

It’s difficult to see it as anything other than a delaying tactic.

DotKids is currently scheduled to go to auction against Google’s .kid and Amazon’s .kids application on October 10.

But after ICANN denied its request for funding last month, DotKids last week filed a Request for Reconsideration (pdf), which may wind up delaying the auction yet again.

According to DotKids, the original intent of the Applicant Support Program was to provide support for worthy applicants not just in terms of application fees, but throughout the application process.

It points to the recommendations of the Joint Applicant Support working group of the GNSO, which came up with the rules for the support program, as evidence of this intent.

It says ICANN needs to address the JAS recommendations it ignored in 2012 — something that could time quite some time — and put the .kids auction on hold until then.