Recent Posts
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Verisign says Afilias tried to “rig” $135 million .web auction
Verisign has jumped back into the fight for the .web gTLD, all guns blazing, with a claim that Afilias offered millions in an attempt to “rig” a private auction for the string.
The .com behemoth accused Afilias last week of “collusive and anti-competitive efforts to rig the [.web] auction in its favor”.
It claims that Afilias offered rival bidder — and secret Verisign stooge — Nu Dot Co up to $17 million if it would participate in a private auction, and then tried to contact NDC during the auction’s “Blackout Period”.
The claims came in an amicus brief (pdf) filed by Verisign as part of Afilias’ Independent Review Process proceeding against ICANN.
The IRP is Afilias’ attempt to overturn the result of the July 2016 .web auction, in which NDC paid ICANN $135 million of Verisign’s money in exchange for the exclusive rights to .web
While neither Verisign nor NDC are parties to the IRP, they’re both attempting to become amicus curiae — “friends of the court” — giving them the right to provide evidence and arguments to the IRP panel.
Verisign argues that its rights would be seriously impacted by the proceeding — Afilias is looking for an emergency ruling preventing .web being delegated — because it won’t be able to bring .web to market.
But it’s also attempting to have the IRP thrown out altogether, on the basis of claims that Afilias broke the auction rules and has “unclean hands”.
Verisign’s brief states:
Afilias and other bidders proposed that a private auction be performed pursuant to collusive and potentially illegal terms about who could win and who would lose the auction, including guarantees of auction proceeds to certain losers of the auction.
NDC CFO Jose Rasco provides as evidence screenshots (pdf) of a text-message conversation he had with Afilias VP of sales Steve Heflin on June 7, 2016, in which Heflin attempts to persuade NDC to go to a private auction.
Every other member of the contention set at that point had agreed to a private auction, in which the winning bid would be shared out among the losers.
NDC was refusing to play along, because it had long ago secretly agreed to bid on behalf of Verisign, and was forcing a last-resort ICANN auction in which ICANN would receive the full sum of the winning bid.
In that SMS conversation, Heflin says: “Can’t give up…how about I guarantee you score at least 16 mil if you go to private auction and lose?” followed by three money-bag emojis that I refuse to quote here on general principle.
Rasco responds with an offer to sell Afilias the .health gTLD, then just weeks away from launch, for $25 million.
Heflin ignores the offer and ups his .web offer to $17.02 million.
Given that it was a contention set of seven applicants, that suggests Afilias reckoned .web was going to sell for at least $100 million.
Verisign claims: “Afilias’s offers to ‘guarantee’ the amount of a payment to NDC as a losing bidder are an explicit offer to pay off NDC to not compete with Afilias in bidding on .web.”
Rasco also provides evidence that Schlund, another .web applicant, attempted to persuade NDC to join what it called an “Alternative Private Auction”.
This process would have divided bidders into “strong” and “weak” categories, with “strong” losing bidders walking away with a greater portion of the winning bid than the “weak” ones.
Verisign and NDC also claims that Afilias broke ICANN’s auction rules when VP John Kane texted Rasco to say: “If ICANN delays the auction next week would you again consider a private auction?”
That text was received July 22, four days before the auction and one day into the so-called “Blackout Period”, during which ICANN auction rules (pdf) prohibit bidders from “cooperating or collaborating” with each other.
At that time, .web applicants Schlund and Radix already suspected Verisign was bankrolling NDC, and they were trying to get the auction delayed.
According to Verisign, Kane’s text means Afilias violated the Blackout rules and therefore it should lose its .web application entirely.
The fact that these rules proscribe “collaborating” during the Blackout suggests that collaborating at other times was actually envisaged, which in turn suggests that Heflin’s texts may not be as naughty as Verisign claims.
Anyway, I think it’s fair to say the gloves, were they ever on, have come off.
Weighing in at over 1,000 pages, the combined amicus briefs and attached exhibits reveal some interesting additional facts that I don’t believe were in the public domain before now and may be worth noting here.
The Verisign filing reveals, I believe for the first time, that the final Verisign bid for .web was $142 million. It only paid $135 million because that was runner-up Afilias’ final bid.
It also reveals that Verisign and NDC signed their “executory agreement” — basically, NDC’s promise to sign over .web if Verisign bankrolled its bid — in August 2015, nearly a year before the auction took place. NDC evidently kept its secret for a long time before rivals got suspicious.
The IRP panelist is scheduled to rule on Afilias’ request for a “stay of all ICANN actions that further the delegation of the .WEB gTLD” on January 28.
Typical of the domain Industry, fight over everything while nothing gets resolved.
By the time this gets settled, Alexa, Cortana, and Siri will be the only ones looking up web addresses. Humans will be all, “Okay Google, read the latest DI to me while I take my VR spa appointment.”
.web isn’t really worth this much. Not in a sea of new gtlds like .site and .link and what not.