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European privacy ruling could add to registrars’ costs

Kevin Murphy, November 6, 2015, Domain Registrars

European domain registrars say they are facing increased costs of doing business due to a recent court ruling on privacy protection.

As a result, US data escrow giant Iron Mountain is likely to lose a lot of its ICANN business, as EU registrars defect to local alternatives such as UK-based NCC Group.

The ruling in question deals with the so-called “safe harbor” principles, under which European companies were able to transfer customers’ private data to US companies as long as the recipient promised to abide by EU privacy protection rules.

However, former spy Edward Snowden’s revelations of widespread privacy violations by the US government seemed to show that many US tech giants were complicit in handing over such data to US spooks.

And now the European Court of Justice has ruled the safe habor principles invalid.

This affects registrars because, under their ICANN contracts, they have to escrow registrant data on a weekly basis. That’s to prevent registrants losing their domains when registrars go out of business or turn out to be crooks.

While registrars have a choice of escrow agents, pretty much all of them use Iron Mountain, because ICANN subsidizes the service down to $0.

However, with the ECJ ruling, Euro-registrars have told ICANN that it would now be “illegal” to continue to use Iron Mountain.

In a recent letter (pdf) to ICANN, about 20 EU-based registrars said that non-European registrars would get a competitive advantage unless ICANN does something about it.

They want ICANN to start subsidizing one or more EU-based escrow agents, enabling them to switch without adding to costs.

the service fees of those [alternative] providers are not being supported by ICANN. Thus, the only solution for EU based registrars to comply with their local laws is to support this extra cost.

We are sure, you will agree this clearly constitutes an unfair disadvantage to a given category of a registrars.

This is why we ask ICANN to offer the same terms as it currently does to Iron Mountain to other RDE [Registrar Data Escrow] providers established in the European Economical Area to ensure a level playing field for registrars globally.

According to the registrars, they have until January to switch, so ICANN may have to move quickly to avoid unrest.