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Draconian Chinese crackdown puts domain industry at risk

Kevin Murphy, May 27, 2015, 13:06:19 (UTC), Domain Policy

The vast majority of top-level domain registries could soon be banned from selling domains into China due to a reported crackdown under a decade-old law.
That’s according to Allegravita, a company that helps registries with their go-to-market strategies in the country.
Allegravita released a report last week claiming that Chinese registrars will be forbidden to sell domains in TLDs that are not on a government-approved list.
The crackdown could come as early as July, the report says:

Foreign registries which have not applied for Chinese market approval are advised to do so in the near term, as unapproved Top-Level Domains are likely to be taken off the market from July this year.

As of April 30, there were only only 14 TLDs on the approved list. All of them are run by Chinese registries and only five do not use Chinese script.
Not on the list: every legacy gTLD, including .com, as well as every ccTLD apart from .cn.
The Draconian move is actually the implementation of regulations introduced by China’s Ministry of Industry and Information Technology over a decade ago but not really enforced since.
As I reported in December, Donuts was facing problems launching its Chinese-script gTLDs due to this red tape.
MIIT announced in 2012 that new gTLD applicants would need licenses to sell into China.
According to Allegrevita, which until recently was working heavily with TLD Registry (“.chinesewebsite”) on its entry into the country, it’s “no longer ambiguous” that MIIT has asserted full oversight of the domain industry in China.
MIIT’s crackdown appears to be focused on the 93 Chinese registrars it has approved to do business.
Allegravita says these companies will not be allowed to sell unapproved TLD domains to Chinese registrants, but that existing registrations will be grandfathered:

by sometime in July 2015, the MIIT will not permit unapproved registries to operate or offer their domains for sale in China. The MIIT will not interfere with existing domain registrations for unapproved registries; however, new registrations will not be permitted to be sold by Chinese registrars to Chinese registrants.

Presumably, non-Chinese registrars will reap the benefits of this as Chinese would-be registrants look elsewhere to buy their domains.
China is an important market for many registries, particularly the low-cost ones.
Judging by MIIT’s web site, getting approval to sell your TLD in China involves a fairly stringent set of requirements, including having a local presence.
MIIT said in a press release last month that the “special action” is designed “to promote the healthy development of the Internet, to protect China’s Internet domain name system safe and reliable operation

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Comments (6)

  1. Simon Cousins says:
    May 27, 2015 at 2:50 pm

    Hi Kevin, thanks for covering this issue. As a China-focused consultancy, we’re always eager to see a more transparent coverage of the unique challenges and opportunities for domains in China.
    A couple of further clarifications since our report, from the last week of daily meetings with our contacts in China:
    As far as real name verification is concerned, so long as the [Chinese mainland] registrant has successfully passed real name verification (RNV) for the domain in it’s first year of registration or renewal under the new regulations, subsequent renewals will not require RNV, so long as the registrant isn’t changed.
    Secondly, the July date is firm and relevant for Chinese mainland registrars – this is the end of the “self examination” phase we referenced in our report. However the overall Chinese registrar re-approvals process closes in September this year (effectively, the last day of Sept) and there is currently some uncertainty about whether unapproved TLDs will be able to be offered for sale during this end-July to end-Sept period. Several highly-placed Chinese contacts have told me “yes”, while other equally highly-placed contacts have said “not sure”. If I were a betting man, I’d put a hundred bucks on “TLDs which have already begun their local approval process by end-July should be able to be sold by Chinese registrants through end-September”. NB this is speculative.
    We have assembled additional information on the coming changes through last and this week and we’ll be updating our report next week. Nothing in our current report has yet been contradicted — the new version will included updated information, and should again be endorsed by the DNA.
    Simon Cousins, Allegravita

    Reply
  2. Acro says:
    May 27, 2015 at 5:11 pm

    How is communist capitalism working for you?

    Reply
  3. Joseph Peterson says:
    May 28, 2015 at 10:20 pm

    Hard to gauge how serious this is. But it’s potentially the biggest story in the domain industry right now.
    A bureaucracy that let its regulations be ignored for a decade plus has suddenly decided to dust them off. They weren’t taken seriously before, yet now they might be?
    Is that the result of registry lobbying? Is it a political shift within China’s internet policy? Is it a new manager hoping to boost the prestige of his position?
    And is the motivation to exclude / promote certain TLDs or simply to assert procedural control? Nothing wrong with lining up the letter of the law with actual practice. However, there are a lot of open questions.
    I certainly can’t read between Chinese lines. But I’m curious what’s there to be read.

    Reply
    • Simon Cousins says:
      May 29, 2015 at 2:14 am

      Hi Joseph, good comments. The current state of affairs is definitely not due to registry lobbying. In fact, it is unthinkable that a mere registry would have any influence at all over how it has its eggs cooked for breakfast in China, let alone over the Ministry of Industry and Information Technology. Your second theory is correct — the clarification and execution of the new regulations are due to a seismic shift in China’s internet governance, starting at the very top: President Xi Jingping and his creation of the Cyberspace Administration of China in 2014. This new peak body has clarified the powerbases of all relevant Chinese regulators, including the MIIT, CNNIC, the Chinese Academy of Sciences, certain State-owned companies and even privately-owned companies. But I geek out… excuse the detour into Chinese governance minutae, which my team and I have dedicated a decade and a half to.
      My personal analysis is that the objectives of the new rules are purely regulatory, not commercial. There is no motivation to block foreign players to commercially benefit domestic Chinese players (athough this has been suspected in other sectors). The new domain-specific rules are all about extending real name verification to all domain names, where previously they were effectively only applied to .cn and .中国 (“.china”) ccTLDs. Note well that this is only one of a number of new and renewed regulatory requirements, but it is, in our opinion, the key one for the peak regulator.
      A full exploration of the topic is beyond the scope of a DI comment, but you may be interested in the revised paper we’re planning to publish in a week or two.
      Best regards, Simon Cousins, Allegravita

      Reply
      • Joseph Peterson says:
        May 29, 2015 at 2:55 am

        Thanks for the detailed reply, Simon. And, by all means, geek out! Birds of a feather in that respect, we 2. Yes, I’d be interested in the paper you’re publishing.

        Reply
  4. Ruben Couto says:
    May 29, 2015 at 3:01 pm

    Sad news for domainers and not only…

    Reply

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