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.web closer to reality as antitrust probe ends

Kevin Murphy, January 10, 2018, Domain Registries

Verisign has been given the all-clear by the US government to go ahead and run the new gTLD .web, despite competition concerns.

The Department of Justice told the company yesterday that the antitrust investigation it launched almost exactly a year ago is now “closed”.

Verisign’s secret proxy in the 2016 auction, the original .web applicant Nu Dot Co, now plans to try to execute its Registry Agreement with ICANN.

That contract would then be assigned to Verisign through the normal ICANN process.

The .com registry operator today filed this statement with the US Securities and Exchange Commission:

As the Company previously disclosed, on January 18, 2017, the Company received a Civil Investigative Demand from the Antitrust Division of the United States Department of Justice (“DOJ”) requesting certain material related to the Company becoming the registry operator for the .web gTLD. On January 9, 2018, the DOJ notified the Company that this investigation was closed. Verisign previously announced on August 1, 2016, that it had provided funds for Nu Dot Co’s successful bid for the .web gTLD and the Company anticipates that Nu Dot Co will now seek to execute the .web Registry Agreement with ICANN and thereafter assign it to Verisign upon consent from ICANN.

This basically means that Justice disagrees with anyone who thinks Verisign plans to operate .web in a way that just props up its .com market dominance, such as by burying it without a trace.

People clamoring to register .web domains may still have some time to wait, however.

Rival applicant Donuts, via subsidiary Ruby Glen, still has a pending lawsuit against ICANN in California.

Donuts had originally sued to prevent the .web auction going ahead in mid-2016, trying to force Nu Dot Co to reveal who was really pulling its strings.

After the auction, in which Verisign committed to pay ICANN a record-setting $125 million, Donuts sued to have the result overturned.

But in November 2016, a judge ruled that the no-suing covenant that all new gTLD applicants had to sign was valid, throwing out Donuts’ case.

Donuts is now appealing that ruling, however, filing its most-recent brief just a few weeks ago.

Whether that will stop ICANN from signing the .web contract and delegating it to Verisign is an open question. It managed to delegate .africa to ZA Central Registry despite the existence of an ongoing lawsuit by a competing applicant.

If history is any guide, we may see a rival applicant apply for a temporary restraining order against .web’s delegation before long.

XYZ junk drop sinks the industry in Q3

Kevin Murphy, December 20, 2017, Domain Registries

The total number of domains registered in the world suffered a rare period of decline in the third quarter, according to Verisign’s latest numbers.

The Q3 Domain Name Industry Brief shows September ended with 330.7 million registered names across all TLDs, a 1.2 million dip on the second quarter.

Year-on-year, there was still growth: 3.7 million domains, or 1.1%.

The shrinkage follows a flat Q2 and a slowing Q1.

The finger of blame can be primarily pointed at .xyz and .top, which lost millions of domains in the quarter due, in .xyz’s case at least, to the expiration of millions of names that had been sold for a penny or two a year earlier.

Not that you’d know this from the DNIB (pdf). For some reason Verisign doesn’t like talking about new gTLD growth rates in its reports, even when they’re going the wrong way.

Verisign’s own .com and .net grew by 1.5 million names to 145.8 million, putting ground between themselves and ccTLDs, which collectively were up by 500,000 names or 0.3% sequentially to 144.7 million.

Justice gives nod to O.com auction

Kevin Murphy, December 18, 2017, Domain Registries

The US Department of Justice does not intend to prevent Verisign from auctioning off the single-letter domain o.com.

Aaron Hoag, chief of the department’s Technology & Financial Services Section, told ICANN in a letter (pdf) that it does not intend to probe Verisign’s proposal.

The letter reads in its entirety:

Your letter dated December 7, 2017, to Makan Delrahim, Assistant Attorney General of the Antitrust Division, regarding VeriSign’s proposal to auction O.COM, has been referred to the Technology & Financial Services Section for review. After careful consideration of the matter, the Division can report that it does not intend to open an investigation into the proposed auction described in the attachment to your letter.

Verisign asked ICANN’s permission to auction o.com, with most of the the proceeds going to good causes, after over a decade of nagging from retailer Overstock.com, which desperately wants to own the currently reserved name.

It would set a precedent for the company to sell off the remaining 22 single-letter domains, not to mention the 10 digits, which are all currently reserved due to a decades-old technical policy no longer considered necessary.

Verisign would only receive its $7.85 base registry fee from the sale, despite the fact that single-letter domains could easily fetch seven or eight figures.

The company asked ICANN for permission to release the name via its Registry Services Evaluation Process last month.

ICANN said earlier this month that it had no objection on technical grounds, but referred it to US competition authorities for a review.

With the DoJ apparently not interested, the door is open for ICANN to approve the RSEP before the end of the year, meaning Verisign could carry out the auction in 2018.

The big question now is whether anyone other than Overstock will want to take part in the auction. Overstock has US trademarks on “O.com”, despite the fact that it’s never actually owned the domain.

ICANN punts o.com auction to US watchdogs

Kevin Murphy, December 11, 2017, Domain Registries

Verisign’s proposed auction of the domain o.com might have a negative effect on competition and has been referred to US regulators.

That’s according to ICANN’s response to the .com registry’s request to release the domain, which is among the 23 single-letter domains currently reserved under the terms of its contract.

ICANN has determined that the release “might raise significant competition issues” and has therefore been referred to “to the appropriate governmental competition authority”.

It’s forwarded Verisign’s request to the US Department of Justice.

Verisign late last month asked ICANN if it could release o.com to auction as a test that could presumably lead to other single-character .com names being released in future.

The plan is for a charity auction, in which almost all the proceeds are donated to internet-related good causes.

Only the company running the auction would make any significant money; Verisign would just take its standard $7.85 annual fee.

ICANN told the company that it could find no technical reason that the release could not go ahead.

The only barrier is the fact that Verisign arguably has government-approved, cash-printing, market dominance and is therefore in a sensitive political position.

Whether its profitless plan will be enough to see the auction given the nod remains to be seen.

A certain bidder in the proposed auction would be Overstock.com, the online retailer, which has been pressuring ICANN and Verisign for the release of O.com for well over a decade and even owns trademarks covering the domain.

Disclosure: several years ago I briefly provided some consulting/writing services to a third party in support of the Verisign and Overstock positions on the release of single-character domain names, but I have no current financial interest in the matter.

Verisign wants to auction off O.com for charity

Kevin Murphy, December 1, 2017, Domain Registries

The internet could soon gets just its fourth active single-character .com domain name, after Verisign revealed plans to auction off o.com for charity.

The company has asked ICANN to allow it to release just one of the 23 remaining one-letter .com domains, which are currently reserved under the terms of the .com registry agreement.

It’s basically a proof of concept that would lead to this contractual restriction being lifted entirely.

O.com has been picked as the guinea pig, because of “long-standing interest” in the domain, according to Verisign.

Overstock.com, the $1.8 billion-a-year US retailer, is known to have huge interest in the name.

The company acquired o.co from .CO Internet for $350,000 during the ccTLD’s 2010 relaunch, then embarked upon a disastrous rebranding campaign that ended when the company estimated it was losing 61% of its type-in traffic to o.com.

Overstock has obsessed over its unobtainable prize for over a decade and would almost certainly be involved in any auction for the domain.

In fact, I wouldn’t be surprised to discover that Overstock pressured Verisign into requesting the release of o.com.

Despite the seven or eight figures that a single-letter .com domain could fetch, Verisign’s cut of the auction proceeds would be just $7.85, its base registry fee.

Regardless, it has a payment schedule in mind that would see the winning bidder continue to pay premium renewal fees for 25 years, eventually doubling the sale price.

The winner would pay their winning bid immediately and get a five-year registration, but then would have to pay 5% of that bid to renew the domain for years six through 25.

In other words, if the winning bid was $1 million, the annual renewal fee after the first five years would be $50,000 and the total amount paid would eventually be $2 million.

All of this money, apart from the auction provider’s cut, would go to a trust that would distribute the funds to internet-focused non-profit organizations, such as those promoting security or open protocols.

There’s also a clause that would seem to discourage domain investors from bidding. The only way to transfer the domain would be if the buyer was acquired entirely, though this could be presumably circumvented with the use of a shell company.

It’s an elaborate auction plan, befitting of the fact that one-character .com domains are super rare.

Only x.com, q.com and z.com are currently registered and it’s Verisign policy to reserve them in the unlikely event they should ever expire.

Billionaire entrepreneur Elon Musk this July reacquired x.com, the domain he used to launch PayPal in the 1990s, back from PayPal for an undisclosed sum.

Z.com was acquired by GMO Internet for $6.8 million in 2014.

Single-character domains are typically not reserved in the ICANN contracts of other gTLDs, whether pre- or post-2012, though it’s standard practice for the registry to reserve them for auction anyway.

Verisign’s reservations in .com and .net are a legacy of IANA policy, pre-ICANN and have been generally considered technically unnecessary for some years.

Still, there’s been a reluctance to simply hand Verisign, already a money-printing machine through accident of history, another windfall of potentially hundreds of millions of dollars by allowing it to sell off the names for profit. Hence the elaborate plan with the O.com trust fund.

The proposal to release O.com requires a contractual amendment, so Verisign has filed a Registry Services Evaluation Process request (pdf) with ICANN that is now open for public comment.

As a matter of disclosure: several years ago I briefly provided some consulting/writing services to a third party in support of the Verisign and Overstock positions on the release of single-character domain names, but I have no current financial interest in the matter.