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Antitrust feds probing Verisign’s .web deal

Kevin Murphy, February 10, 2017, Domain Policy

US antitrust authorities are investigating Verisign over its anticipated operation of the .web gTLD.

The probe was disclosed by company CEO Jim Bidzos in yesterday’s fourth-quarter earnings call. He said:

On January 18, 2017, the company received a Civil Investigative Demand from the Antitrust Division of the US Department of Justice, requesting certain information related to Verisign’s potential operations of the .web TLD. The CID is not directed at Verisign’s existing registry agreements.

He did not comment further, beyond describing it as “kind of like a subpoena”.

Verisign acquired the rights to run .web at an ICANN last-resort auction last July, agreeing to pay $135 million.

Rather than applying for the gTLD itself, it secretly bankrolled shell company Nu Dot Co, which intends to transfer its .web contract to Verisign after it is signed.

ICANN is being sued by rival applicant Donuts, which claims NDC should have been banned from the auction. Afilias, the auction runner up, is also challenging the outcome.

But this new DoJ investigation, if we take Bidzos’ words at face value, appears to focus on what Verisign plans to do with .web once it is live.

It’s the view of many that .web would be the new gTLD best positioned as an alternative to .com, which makes Verisign hundreds of millions of dollars a year.

It’s my view that it would make perfect sense for Verisign to flush the $135 million and bury .web, rather than have a viable competitor on the market.

Verisign has repeatedly said that intends to “grow and widely distribute .web”, words Bidzos repeated last night.

The investigation is likely into whether Verisign wants to actually raise .web, or strangle it in its crib.

It seems the investigation was launched in the dying days of the Obama administration, so the recent changing of the guard at Justice — Attorney General Jeff Sessions was confirmed by Congress just two days ago — may have an impact on how it plays out.

ISOC New York challenges Neustar’s .nyc contract

Kevin Murphy, February 8, 2017, Domain Registries

The New York chapter of the Internet Society has called upon the city to delay the renewal of Neustar’s contract to run the .nyc gTLD, citing numerous concerns about how it is being managed.

In a letter (pdf) to Mayor Bill de Blasio, the group calls for a “town hall” and community consultation and for the city to “make appropriate adjustments” before the contract is renewed.

Its beef appears to be what it sees as .nyc’s lackluster performance in the market and the lack of promised community engagement.

The ISOC-NY letter contains a list of over a dozen “observations and nitpicks”.

These include a decline in .nyc registration volume, that fact that most .nyc names are parked, and the fact that Whois privacy is banned from the gTLD.

Neustar’s current contract is due to be renewed March, according to the letter.

(This post was updated February 8 to correct the expiry date of Neustar’s contract.)

.club financing option sees early traction with $150k sales

Kevin Murphy, February 6, 2017, Domain Registries

.CLUB Domains said it has seen some early successes with its new 0% financing option, selling $150,000 worth of premium .club domains in its first week.

The registry announced that it sold 39 premiums for a total of $149,480, and that 37 of those names were sold using the financing option.

This option allows registrants to spread the cost of their domains over five years — 60 monthly payments — for names priced over $1,000.

The scheme was announced at the NamesCon conference in conjunction with a new brokers program, which gives brokers the ability to pass on 10% discounts to their clients and earn 15% commissions.

Seventeen of the 39 names were sold via brokers.

The results of the the first seven days of these programs compare favorably to other periods. In the fourth quarter of 2016, .CLUB said premium sales were $112,000.

For the whole of 2016, the registry sold $941,000 of reserved premium names, making a total of $4.3 million since .club launched May 2014.

ICANN loses another IRP — .sport gTLD fight reopens as panel finds “apparent bias”

Kevin Murphy, February 2, 2017, Domain Registries

The future of the .sport gTLD was cast into turmoil this week after an independent panel ruled that there was “apparent bias” in the decision that awarded the string to a group linked to the Olympics.

The new Independent Review Panel ruling found that ICANN broke its own bylaws by refusing to allow Famous Four Media to appeal a 2013 decision that essentially awarded .sport to rival bidder SportAccord.

FFM claims the expert panelist tasked with deciding SportAccord’s Community Objection had undisclosed conflicts of interest that made him much more likely to rule in favor of SportAccord, which is backed by the International Olympic Committee, than FFM, which is a purely commercial operator.

And the IRP panel did not disagree, ruling this week that ICANN should have taken FFM’s claims into account before rejecting its requests for an appeal in 2014.

The ruling means that ICANN may be forced to throw out the Community Objection decision from 2013 and order it to be re-tried with a new expert, potentially allowing FFM back into the .sport contest.

As usual with IRP cases, the ruling is a complex and very dry read, involving multiple layers of objections, appeals, panels and experts.

FFM and SportAccord were the only two applicants for .sport in the 2012 application round.

SportAccord, which has the backing of dozens of sporting organizations in addition to the IOC, claims to represent pretty much all organized sport and wants to run .sport with restrictions on who can register.

FFM, conversely, wants to keep it open to everyone with a passing interest in sport.

In an attempt to kick FFM out of the contest without a potentially expensive auction, SportAccord filed, and then won, a Community Objection in 2013.

To win, it had to prove that the interests of the sport community would be harmed if FFM got to run it. The objection expert panelist, Guido Tawil, came down on SportAccord’s side.

FFM naturally enough disagreed with his conclusion, and vowed to fight to overturn it.

The registry later discovered that Tawil had undisclosed ties to the IOC, which it said should have disqualified him from acting as an independent expert.

First, Tawil attended a conference of the International Bar Association in Rio de Janeiro in 2011 called “Olympic‐Size Investments: Business Opportunities and Legal Framework”, where he co‐chaired a panel entitled “The quest for optimising the dispute resolution process in major sport‐hosting events”.

Second, the law firm he works for, Argentina-based M & M Bomchil, counts DirecTV among its key clients and at the time of the Community Objection DirecTV was negotiating with the IOC for Latin America broadcasting rights for the Sochi 2014 and Rio 2016 Olympics, rights it subsequently obtained.

Third, a partner in Tawil’s law firm is president of Torneos y Competencias, a sports broadcaster with ties to DirecTV.

FFM has claimed: “Guido Tawil’s own legal practice and business is built around a company for whom IOC broadcasting rights are a core aspect of its business.”

While FFM filed two Requests for Reconsideration with ICANN in late 2013 and early 2014, raising the possibility of conflicts of interest and demanding ICANN have Tawil’s ruling thrown out, both were rejected by ICANN’s Board Governance Committee.

It also took its claims to the ICANN Ombudsman, who drafted (but did not finalize) a finding that agreed with FFM that the Community Objection should be retried with a new expert.

The subsequent IRP filing challenged the two RfR decisions and, two years later, the IRP panel has now ruled:

the IRP Panel is of the view that in order to have upheld the integrity of the system, in accordance with its Core Values, the ICANN Board was required properly to consider whether allegations of apparent bias in fact gave rise to a basis for reconsideration of an Expert Determination. It failed to do so and, consequently, is in breach of its governing documents.

The panel also said that ICANN should have taken the Ombudsman’s draft report into account.

It declared:

that the action of the ICANN Board in failing substantively to consider the evidence of apparent bias of the Expert arising after the Expert Determination had been rendered was inconsistent with the Articles, Bylaws and/or the Applicant Guidebook.

The panel has ordered ICANN to pay FFM’s share of the $152,673 IRP costs.

ICANN’s board will now have to consider the IRP decision, and it seems very possible that a new Community Objection review might be ordered.

On the face of it, it looks like a big win for FFM.

That does not mean that SportAccord will not prevail in its objection for a second time, even with a different presiding expert, however.

One fact in its favor is that it now has three years’ worth of evidence of how Famous Four conducts its business — selling domains at super-cheap prices, some say at the expense of the cleanliness of its namespaces — with which to attempt to show the likelihood of harm.

What seems certain is that the .sport gTLD is not going to see the light of day any time soon.

Read the ruling as a PDF here.

Rightside sells eNom to Tucows for $83.5m

Kevin Murphy, January 23, 2017, Domain Registrars

Tucows is to become “the second largest registrar in the world” by acquiring eNom from Rightside, paying $83.5 million.

The deal will give Tucows another 14.5 million domains under management and 28,000 resellers, giving it a total of 29 million DUM and 40,000 resellers.

That DUM number, which appears to include ccTLDs, makes Tucows the undisputed volume leader in the reseller world and the second-largest registrar overall.

GoDaddy, the DUM leader, had about 55 million domains just in gTLDs at the last count.

Tucows CEO Elliot Noss told analysts that the deal, along with the April 2016 acquisition of Melbourne IT’s reseller business, were “individual opportunistic transactions”.

He said that Tucows will take its time integrating the two companies, but expects to realize cost savings (presumably read: job losses as duplicate administrative positions are eliminated) over 24 months.

The reseller APIs will not change, and Tucows will not migrate names over to its own existing ICANN accreditations. This could help with reseller retention.

For Rightside, the company said the spin-off will allow it to focus on vertical integration between its gTLD registry business and its consumer-facing registrar, Name.com.

Rightside had come in for a certain amount of high-profile investor criticism for its dogged focus on new gTLDs at the expense of its eNom and Name.com businesses.

Activist investor J Carlo Cannell, supported by fellow investor and Uniregistry CEO Frank Schilling, a year ago accused Rightside of putting too much emphasis on “garbage” new gTLDs instead of its more profitable registrar businesses.

Since then, Rightside has rebuffed separate offers for some or all of its gTLDs by rivals Donuts and XYZ.com.

Last June, it also announced plans to modernize eNom, which Cannell and others had accused of looking stale compared to its competitors.