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No .web until 2021 after Afilias files ICANN appeal

Kevin Murphy, December 6, 2018, 14:21:27 (UTC), Domain Registries

Afilias has taken ICANN to arbitration to prevent .web being delegated to Verisign.
The company, which came second in the $135 million auction that Verisign won in 2016, filed Independent Review Process documents in late November.
The upshot of the filing is that .web, considered by many the best potential competitor for .com — Afilias describes it as “crown jewels of the New gTLD Program” — is very probably not going to hit the market for at least a couple more years.
Afilias says in in its filing that:

ICANN is enabling VeriSign to acquire the .WEB gTLD, the next closest competitor to VeriSign’s monopoly, and in so doing has eviscerated one of the central pillars of the New gTLD Program: to introduce and promote competition in the Internet namespace in order to break VeriSign’s monopoly

Its beef is that Verisign acquired the rights to .web by hiding behind a third-party proxy, Nu Dot Co, the shell corporation linked to the co-founders of .CO Internet that appears to have been set up in 2012 purely to make money by losing new gTLD auctions.
Afilias says NDC broke the rules of the new gTLD program by failing to notify ICANN that it had made an agreement with Verisign to sign over its rights to .web in advance of the auction.
The company says that NDC’s “obligation to immediately assign .WEB to VeriSign fundamentally changed the nature of NDC’s application” and that ICANN and the other .web applicants should have been told.
NDC’s application had stated that .web was going to compete with .com, and Verisign’s acquisition of the contract would make that claim false, Afilias says.
This means ICANN broke its bylaws commitment to apply its policies, “neutrally, objectively, and fairly”, Afilias claims.
Allowing Verisign to acquire its most significant potential competitor also breaks ICANN’s commitment to introduce competition to the gTLD market, the company reckons.
It will be up to a three-person panel of retired judges to decide whether these claims holds water.
The IRP filing was not unexpected. I noted that it seemed likely after a court threw out a Donuts lawsuit against ICANN which attempted to overturn the auction result for pretty much the same reasons.
The judge in that case ruled that new gTLD applicants’ covenant not to sue ICANN was valid, largely because alternatives such as IRP are available.
ICANN has a recent track record of performing poorly under IRP scrutiny, but this case is by no means a slam-dunk for Afilias.
ICANN could argue that the .web case was not unique, for starters.
The .blog contention set was won by an affiliate of WordPress maker Automattic under almost identical circumstances earlier in 2016, with Colombian-linked applicant Primer Nivel paying $19 million at private auction, secretly bankrolled by WordPress.
Nobody complained about that outcome, probably because it was a private auction so all the other .blog applicants got an even split of the winning bid.
Afilias wants the .web IRP panel to declare NDC’s bid invalid and award .web to Afilias at its final bid price.
For those champing at the bit to register .web domains, and there are some, the filing means they’ve likely got another couple years to wait.
I’ve never known an IRP to take under a year to complete, from filing to final declaration. We’re likely looking at something closer to 18 months.
Even after the declaration, we’d be looking at more months for ICANN’s board to figure out how to implement the decision, and more months still for the implementation itself.
Barring further appeals, I’d say it’s very unlikely .web will start being sold until 2021 at the very earliest, assuming the winning registry is actually motivated to bring it to market as quickly as possible.
The IRP is no skin off Verisign’s nose, of course. Its acquisition of .web was, in my opinion, more about restricting competition than expanding its revenue streams, so a delay simply plays into its hands.

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Comments (12)

  1. Regarding
    “Nu Dot Co, the shell corporation linked to the co-founders of .CO Internet that appears to have been set up in 2012 purely to make money by losing new gTLD auctions.”
    I personally don’t think this is the case. I think they intended to win auctions, but then decided otherwise when people were bidding ridiculous amounts for domains that will never be recovered.

    • Kevin Murphy says:

      You might be right, but it’s impossible to know without mind-reading the applicant.
      NDC made a tonne of money losing auctions, and likely a tonne more winning one for Verisign.
      It applied for 13 gTLDs and will wind up running none, yet walks away from the program with millions.
      If I say it “appears” to be have been set up to make money on auctions, there’s a good reason for that.

    • JTW says:

      Hi Andrew,
      Just poking around the site, have you heard anything about how the Afilias/ICANN IRP is progressing, news seems light.
      Also interested in your thoughts on the new .Dev …

  2. Mark Thorpe says:

    The .Web drama continues…

  3. Richard Funden says:

    Assuming that the .web play by Verisign was less motivated by wanting to run the TLD and more by wanting to control the potential competition it might pose to .com and .net Afilias seems to be playing right into the hands of Verisign.

  4. Rob Hall says:

    There is no evidence to say Verisign will shelve .web or not release it.
    When .web goes live, it would absolutely competition for .com and many other TLD’s. The fact that it is owned by the same company doesn’t invalidate that it will be a competitive TLD.
    This situation happened over and over. Applicants sold their TLD either before or after the auction to another party. Isn’t that just business as usual ? You purchase an asset, perhaps with a loan from someone else, and then sell it ? Seems pretty straight forward to me.
    I suspect this is all a lot of noise simply because it’s the company we most love to hate.
    Frankly, I am surprised they didn’t use their wallet on many other TLD’s. If I were them, I likely would have bought Donuts too.
    And isn’t verisign public ? So if you really wanted to own .web, just buy Verisign. You get .com as a bonus. Hey Amazon, why not pick up Verisign and Donuts. Now there is a fun thought.
    Bet this entire argument would go poof.

    • Kevin Murphy says:

      “just buy Verisign”
      Seems reasonable.
      If you have $18 billion spare.

      • Rob says:

        For Amazon, Google and some other players in the TLD space, or that might want to get into it, 18 billion is not out of the question at all.

        • L.Oriol says:

          Rob…. $18b? Keep dreaming. VRSN would command a premium far in excess of their current market cap which well exceeds that figure. Somewhere in the neighborhood of 40% based on other recent high profile acquisitions. Putting this fantasy figure closer to $25b which would be over _twice_ what Alphabet paid for Motorola (12.5) and nowhere near Amazon’s splurge on Whole Foods (14). In short — it would be a record smashing acquisition for either of them what would raise PLENTY of questions.
          Also, I’m not sure where Amazon came into this picture. Did you mean Afilias? I mean — both start with an A but that’s about where the similarities end.

  5. Mike says:

    ICANN’s dirty little secret is that none of these failed new gTLDs will ever truly fail. Once they stop paying ICANN and their registry backend, the EBERO program kicks in and ICANN keeps them on life support for up to 3 years with money fronted by the registry. Unless someone comes in a assumes the liability, ICANN is stuck with it and will have to pay the costs of keeping it alive. This is going to add up over time. Watch – ICANN will be stuck operating them. As if they already didn’t have financial pressures. These companies need to fail and go away forever. Sooner the better.

    • Kevin Murphy says:

      I think the idea with EBERO is that the TLD is removed from the root after three years, unless somebody steps up to take it over. The three years is there to give registrants time to migrate smoothly to a new TLD.

    • Rubens Kuhl says:

      What the EBERO contracts specify is that the target is to transition within a year, with no guarantee to do so. ICANN FAQ says EBERO and ICANN are ready to stand more than year, but there is no time limit specified, so it could stay in EBERO forever, paid for by the stand-by fee (which is anual and fixed regardless of number of TLDs or domains).

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