ICANN to kill auction fund bylaws change

A controversial proposed amendment to ICANN’s bylaws is set to be killed off after the community flexed its muscles over the board of directors.

The amendment, which sought to give ICANN a switch to turn off its accountability mechanisms under certain circumstances, is now likely to be replaced by one that limits accountability only when it comes to ICANN’s $220 million Grant Program.

News of the board’s change of heart came during a Monday call between the GNSO Council and the two GNSO appointees on the board.

“I think it’s pretty clear that the bylaw that was put together and circulated is not going to pass the Empowered Community,” board member Becky Burr told the Council “So we need to go back and and revisit that.”

The community had wanted an amendment that makes the Independent Review Process and Request for Reconsideration mechanisms unavailable to organizations applying for grants and those that oppose them, to avoid splurging money on lawyers rather than good causes, but the board had floated text that would have made it easier to turn these mechanisms off in future scenarios too.

ICANN’s amendment was supported by the At-Large Advisory Committee, but every other community group, in a rare example of across-the-aisles agreement, reckoned it was overly broad and risked weakening ICANN’s accountability.

The board’s decision to revert to what the community originally wanted appears to be a reluctant one. Burr said that the IRP needs to be looked at in future because the way the bylaws are written now invites over-use.

“As they are currently written, a disappointed bidder, an engineering firm in response to an RFP, could use those, could bring an IRP,” she said. “At some point we’re going to have to look at this more holistically.”

The were also calls from the Council to take a look at the RfR process, or at least how RfRs are handled by ICANN’s legal team. RfRs are too often seen as an adversarial exercise where ICANN lawyers are simply try to “win” against the requester rather than solve the problem at hand, they said. This has led to a situation where dozens of RfRs have been filed over the year, almost all of which are dismissed.

ICANN restarts work on controversial Whois privacy rules

ICANN is to bring in new rules for Whois privacy and proxy services, the best part of a decade after they were first proposed to massive controversy.

It’s looking for volunteers to work with Org staff on implementing policy recommendations that in 2015 led to tens of thousands of people expressing outrage about the dangers, as they saw it, of their privacy being breached.

ICANN is putting together an Implementation Review Team to help implement the recommendations of the Privacy and Proxy Services Accreditation Issues Policy Development Process, known as PPSAI, which sought to bring privacy/proxy services under ICANN’s regulatory umbrella.

The recommendations were hugely controversial in their first draft, which in a minority statement expressed the view that people should be banned from using their domains commercially if they were using privacy services.

But the IRT will be tasked with implementing the final draft, which expunged the calls for such a ban.

The policy still calls for ICANN to run an accreditation system for privacy/proxy services in much the same way as it accredits registrars. It also lays out rules for how such services should gather registrant data and how to treat customer interactions.

But the recommendations are undeniably from a different era, thunk up before the EU’s General Data Protection Regulation made privacy-by-default essentially the industry standard for Whois records.

The PPSAI recommendations now interact with policies and practices that have been adopted in the intervening years, such as the recent Registration Data Policy and the Registration Data Request Service.

People willing to donate 10 to 20 hours a month to the new IRT can check out more details here.

GNSO mulls lawyering up over auction fund dispute

The GNSO Council has started discussing bringing in the lawyers over ICANN’s recent handling of issues related to its $200+ million auction fund and Grant Program.

The Council today raised the possibility of deploying the never-before-used Community Independent Review Process, which would involve every major community group ganging up on ICANN’s board in a protracted quasi-judicial bunfight.

Ironically, the beef concerns the way ICANN is trying to stop people invoking its accountability mechanisms, including the IRP, to challenge decisions it makes under its Grant Program, which hopes to distribute $10 million to worthy causes this year.

ICANN policy is that nobody should be able to challenge grant decisions, because that would mean funneling the available funds into the pockets of worthless lawyers, rather than worthy causes. But how it proposes to achieve that goal is in dispute.

The original community recommendation was for a bylaws amendment that specified that the Grant Program was out-of-bounds for IRP and Request for Reconsideration claims, and the board initially agreed, before changing its mind and instead plumping for a clause in the program’s terms that prevents grant applicants appealing adverse decisions.

After community pushback, the board said it would also propose a bylaws amendment, but many believe the amendment it came up with goes way too far and risks making it far too easy for ICANN to wriggle out of its accountability obligations in future.

Leading the fight against the board is the GNSO’s Intellectual Property Constituency, which filed a Request for Reconsideration in November, asking ICANN to reverse its decision to “contract around” its accountability promises and scale back its over-broad bylaws amendment.

But the RfR was thrown out, with the Board Accountability Mechanisms Committee ruling that the IPC had failed to say how it had been specifically harmed by the board’s actions, accusing the constituency of merely “speculating” about possible future harms.

GNSO Councillor Susan Payne, today expressed the IPC’s disappointment with BAMC’s decision on the Council’s monthly conference call.

“We think that’s wrong,” she said. “If you purport to change a fundamental bylaw by using a process that cuts out the GNSO and effectively therefore also its constituencies and stakeholder groups then clearly there’s a harm there.”

She also noted the financial expense of challenging the board’s decisions.

“Constituencies or stakeholder groups will have real difficulty in withstanding the ICANN machine,” Payne said. “It’s a really expensive process to to challenge these kind of decisions. We asked if other constituencies and stakeholder groups would be able to join the IPC in bringing that RfR and no one had the finances to do it.”

The IPC has joined ICANN in a Cooperative Engagement Process — a kind of informal discussion that is often a precursor to an IRP filing — but Payne raised the possibility of ICANN’s Empowered Community filing its own IRP.

Under ICANN’s bylaws, the EC has the special ability to bring a Community IRP and ICANN has to pay for it. It’s never been used before, and it doesn’t look to me like the complex conditions required to trigger it are close to having been met.

The IPC had broad support in principle from the other Councillors speaking in today’s meeting, but some urged caution due to ICANN’s past behavior when the lawyers are called in.

“Once you get into the IRP process, ICANN buckles down, hands it off to their outside counsel, and you really get a nasty litigation fight,” said Jeff Neuman, a liaison on the Council. “You’re talking about years of litigation, outside counsel, and no progress”.

Fellow council member Thomas Rickert of the ISPs constituency suggested looking for a law firm that would handle the IRP on a no-win-no-fee basis before committing further.

While it seems a Community IRP may be unrealistic for now, the fact that it’s even being discussed shows how seriously the GNSO is taking this apparent power grab by ICANN’s board and lawyers.

Jury still out on ICANN’s content policing powers

Key ICANN community groups have refused to come down on one side or the other in the debate about proposed content policing powers, leaving the question up in the air as ICANN considers a major bylaws amendment.

As I reported last month, ICANN is thinking about changing its governing bylaws to permit it to enforce Registry Voluntary Commitments — contract clauses that could include rules on the content of web sites — on registries in future new gTLD application rounds.

ICANN’s board is convinced that it needs to amend the Org’s bylaws, which explicitly prevent it policing content, in order to do this. It is concerned that “there are political, practical, and reputational risks associated with ICANN negotiating and entering into contract provisions that have the effect of restricting content in gTLDs”.

Such an amendment would require the consent of the five-member Empowered Community, to which ICANN answers, and so far there’s little indication that it would be able to secure the three votes needed.

The EC is made up of the ASO, the ccNSO, the GNSO, the ALAC and the GAC, and so far only the ALAC has said that it supports a bylaws amendment. The GNSO is split, with contracted parties dead against the amendment, and would be unlikely to vote in favor. The GAC seems to be on the fence.

The ASO and ccNSO both declined to express an opinion, saying matters related to gTLDs are outside of their remit, but ICANN chair Tripti Sinha pressed the groups to reconsider in letters this March.

Now, both groups have responded by digging their heels in — nope, it’s none of our business, they say.

“The topics addressed in the consultation are outside the scope of the ASO, so we respectfully decline the invitation to provide input at this time,” the ASO said.

“After careful consideration, we still do not see conditions which warrant our participation in the implementation of the next round of new gTLDs,” the ccNSO said.

The ccNSO added that it could only comment on a proposed bylaws amendment if it could see the draft text of the amendment, and that is not yet available.

If ICANN leadership was hoping for clarity on whether a content policing bylaws change is even feasible, it looks like it doesn’t have it yet.

It now takes TWO WEEKS to get a Whois record with RDRS

There’s been a shocking increase in the time it takes to get a Whois record disclosed under ICANN’s Registration Data Request Service, according to the latest monthly data.

It took on average 14.09 days to have a request for private Whois data approved using RDRS in April, more than double the previous high, recorded in February, of 6.92 days, the data shows. The average since the system launched at the end of November is 6.73 days.

The average time to have a request denied was 11.26 days, up from 6.17 days in March, the data also shows.

RDRS is a mechanism that allows people — largely intellectual property interests and law enforcement — to request unredacted domain ownership information. ICANN doesn’t handle the requests, it just forwards them to the responsible registrar.

It’s not obvious from the data why requests in April suddenly took so much longer to approve. Any number of reasons, from technical problems to a shift in the mix towards particularly sluggish registrars, could have thrown the average.

The percentage of requests that were approved was down very slightly compared to March, at 19.16% compared to 20.26%. Denied requests were up to 71.26% compared to 69.5% in March. Requests were largely denied because of data protection law or because the requester didn’t provide enough information.

Since RDRS launched five months ago, there have been 1,215 disclosure requests, 210 of which were approved. That works out to about 1.36 approved requests per day.

Registrar coverage improved a little in April, with three registrars newly listed and one (Sweden’s Ilait AB, which has about 6,000 domains) removed. The number of gTLD domains covered as a percentage remained flat at 57%.

ICANN has spent almost $2 million on RDRS to date. It’s a two-year pilot, and at some point it will have to be decided whether the expense is worth it.

Travel expenses push ICANN into the red again

ICANN is spending millions of dollars more than expected in its current financial year, which it blames mainly on inflation pushing up the price of flights and hotels.

The latest quarterly financial report, for the nine months to March 31, shows ICANN operations spent $112 million in the period, which was $6 million more than it had budgeted for. Funding was $113 million, $3 million more than expected, leading to a total deficit of $3 million.

ICANN said the costs were “driven by higher than planned costs for ICANN78, ICANN 79, community programs, and support of meetings other than ICANN Public meetings… primarily due to inflationary increases to travel and venue costs”.

ICANN 79, which took place in Puerto Rico in March, cost $600,000 more than budget. This was due to higher flight and hotel prices and more sessions than had been planned. ICANN said in February that October’s meeting in Hamburg had come in $900,000 over budget.

Funding for the nine months came in ahead of budget largely due to better-than-expected registrar fees, most likely related to drop-catching registrar Gname’s decision to buy 150 more registrar accreditations last December.

The report, which covers the third quarter of ICANN’s fiscal 2024, also breaks out how much some of the Org’s important projects have cost.

The Grant Program, which launched at the end of the quarter, has cost almost $1.4 million in development and operating expenses since July 2022, about $18,000 over budget. That’s obviously a big chunk of the $10 million ICANN intends to hand out this year, but nothing compared to the auction proceeds fund that the grants come from — that was up $9 million to $226 million since last July based on investment gains.

The Registration Data Request Service, which launched last November, has cost just shy of $2 million to develop and run since December 2022. Compare this to the $100 million a year ICANN had predicted before the ambitions of the original proposed project were massively scaled back.

Overall, ICANN’s financial position is still incredibly healthy. Its total funds under management was up $11 million to $529 million over the nine months due to investment gains.

Correction: Sinha’s seat is safe

Last Friday, I speculated that, based on my back-of-the-envelope calculations, ICANN chair Tripti Sinha could find herself ineligible to continue on the ICANN board of directors this November, due to geographic diversity quotas.

My calculations were incorrect, it turns out. While she still needs to be reappointed by the Nominating Committee, Sinha is not limited by the geographic diversity limits. I’ve deleted the article and apologize for the error.

Single-letter .com case back in court

The domainer trying to get his hands on all the remaining single-character .com and .net domain names has re-filed his lawsuit against ICANN.

Bryan Tallman of VerandaGlobal.com (dba First Place Internet) has filed an amended complaint in a California court, after the judge threw out his initial complaint in March. He alleges deceptive trade practices and breach of contract, among other things.

His claim is that he has sole rights to all unregistered single-character .com and .net domains, such as 1.com and a.net, because he’s registered the matching domains in Verisign’s internationalized domain name transliterations, such as the Hebrew קום. or the Korean/Hangul .닷컴.

He paid Verisign, via registrar CSC Global, $25,285 for 1.닷넷 back in 2017 and reckons he was also buying the exclusive rights to 1.com and 1.net. The same arguments applies to the dozens of other ASCII.IDN domains he registered, according to the complaint.

The argument rests almost entirely on a letter (pdf) from Verisign to ICANN in 2013, in which the registry sets out some of its plans for its IDN gTLDs.

The letter is imprecisely worded, to the point where if you squint a bit, drop some acid, and hit your head against the wall a few times, you might be persuaded that Verisign is saying it would be willing to sell the rights to 1.com for 25 grand.

The complaint says this letter is “ICANN policy”, and the rest of its arguments are pretty much based on that incorrect premise.

ICANN has already filed a demurrer, asking the court to throw out the complaint again, largely on the grounds that the letter is not “policy” and ICANN doesn’t have a contract with any of the plaintiffs that it could be accused of breaching anyway.

The latest filings can be found here.

ICANN to slash costs as Verisign’s magic money tree dries up

ICANN is looking for $8 million of cost savings, $3 million more than it expected a quarter ago, amid gloomy predictions about the domain industry’s likely performance this year.

The Org last week told community members that it’s having to revise its expected revenue down by $3 million to $145 million after it became clear domain sales won’t be as good as previously thought. The new budget is due to be approved by the board this coming weekend.

“ICANN faces an inflation of its costs and also happens to face a lack of inflation of its funding,” CFO Xavier Calvez said on one of two conference calls explaining the changes.

ICANN’s bean counters are now predicting a 4% decline in transaction fees from legacy gTLDs — a line item mostly comprising .com — for ICANN’s fiscal 2025, which begins this July. Back in December, when the first draft of the budget was published, the prediction was for 0% growth.

The grim numbers match Verisign’s own growth story for the rest of the calendar year. Company bosses last week predicted .com/.net to grow at between 0.25% and negative 1.75%, a downwards revision on its guidance in February.

Talking to Verisign and other registries and registrars and looking at the monthly transaction data they file is the main way ICANN formulates its budget predictions.

“We gauged very strong expectations of a contraction in domain name registrations,” ICANN programs director Mukesh Chulani said.

Meanwhile, ICANN estimates transaction fees for new gTLDs will increase 7% in FY25, obviously from a much lower base then legacy, compared to the December estimate of 2% growth.

ICANN was already expecting its funding to miss its spending requirements by $5 million, but that figure is now $8 million. But rather than run ops at a loss, ICANN has instead put this number on a line labelled “Cost Savings Initiatives” in order to present a balanced bottom line.

Where these cost savings might come from doesn’t seem to have been figured out yet, and there’s some community worry that services might be affected by cuts.

There was some talk of finding efficiencies in the travel budget or with contractors, but those budgets are $13 million and $24 million respectively, so any cuts there could be swingeing.

By far the largest expenditure line item is staff, which costs $90 million. But there’s been no change to the expected number of ICANN full-timers in the budget, so layoffs don’t seem to be on the cards just yet.

Community revolts over ICANN’s auction proceeds power grab

Parts of the ICANN community have revolted over ICANN’s move to make it easier to turn off the mechanisms used to appeal its decisions.

Both registries and registrars, along with their usual opponents in the business and intellectual property communities, have told the Org that a proposal to change its foundational bylaws are overly broad and creates new powers to diminish ICANN’s accountability.

Meanwhile, the Intellectual Property Constituency seems to have escalated its beef with ICANN related to the proposals, entering into a Cooperative Engagement Process with ICANN. CEP is usually, but not always, a precursor to an expensive, quasi-judicial Independent Review Process case.

The row relates to the Grant Program, which launched a month ago and will see ICANN hand out $217 million it gained from auctioning registry contracts during the 2012 new gTLD program application round.

The rules of the program were developed by the Cross-Community Working Group on New gTLD Auction Proceeds.

The CCWG was afraid that ICANN might wind up frittering away most of the money on legal fees unless unsuccessful grant applicants, and third parties, were banned from appealing grant decisions they didn’t like. So its Recommendation 7 proposed a bylaws amendment that would prevent the Independent Review Process and Request for Reconsideration process from being used with reference to the Grant Program.

What ICANN came up with instead is a bylaws amendment that could be applied not only to the Grant Program, but also potentially to any future activities.

Specifically, ICANN’s proposed amendment gives future CCWGs, assuming they have sufficient community representation, the ability to recommend exceptions to the accountability mechanisms, which ICANN could then accept without having the amend the bylaws every time.

But almost every constituency that has filed an opinion on the proposals so far thinks ICANN has gone too far.

The IPC said says ICANN’s proposal is “unacceptably broad and exceeds what is necessary to give effect to Recommendation 7” adding:

The IPC is also concerned that making such a broad Bylaws amendment could have the consequence of normalizing the idea of removing access to accountability mechanisms, rather than this being an exceptional event. This is not something that should be encouraged.

The Registries Stakeholder Group said the proposal “creates an alternative path for amending the Bylaws that contradicts the existing amendment processes”

“The Accountability Mechanisms are foundational to ICANN’s legitimacy. Access to Accountability Mechanisms should be prevented only in rare circumstances with the clear support of the Empowered Community,” it added.

The Registrar Stakeholder Group concurred, writing:

Robust Accountability Mechanisms are a lynchpin of ICANN’s broader accountability structure. They should only be disallowed, if ever, in very specific circumstances, and as a result of the full bylaw amendment process. The proposed bylaws amendment vests CCWGs with the power to disallow Accountability Mechanisms which we believe is inappropriate.

Several commenters pointed out that CCWGs are less formal ICANN policy-making structure, with fewer checks and balances than regular Policy Development Processes.

The only dissenting view came from the At-Large Advisory Committee, which said it “strongly supports” ICANN’s proposed amendment, writing:

Although any limitation in accountability is potentially onerous, the ALAC is comfortable that the three conditions proposed in the amendment only allow such limitations in situations where a more specific Bylaw limitation would also be approved by the Empowered Community.

In a related development, the IPC has taken the highly unusual move of entering CEP with ICANN, suggesting it is on the IRP path.

The IPC had filed a Request for Reconsideration late last year, at a time when it appeared that ICANN had outright rejected Recommendation 7 (having previously approved it), but ICANN’s board threw it out mostly on the grounds that the IPC could not show it had been harmed, which the IPC found curious.

If the IPC were to go to IRP, it would be unprecedented. The mechanism has only ever been used by companies defending their commercial interests, never by one of ICANN’s own community groups on a matter of principle.