EFF rages as Ethos closes Donuts buy

The Electronic Frontier Foundation thinks the acquisition of Donuts by “secretive” private equity group Ethos Capital represents a risk to free speech.

The deal, which sees Ethos buy a controlling stake from fellow PE firm Abry Partners, closed earlier this week, having apparently received no official objection from ICANN.

But the EFF now wants ICANN to force Donuts to change its gTLD registry contracts to make it harder for the company to engage in what it calls “censorship-for-profit”.

The group’s senior staff attorney, Mitch Stoltz, raised the issued at the Public Forum session of last week’s ICANN 70 virtual public meeting, and expanded upon his thinking in a blog post this week. He wrote:

Donuts already has questionable practices when it comes to safeguarding its users’ speech rights. Its contracts with ICANN contain unusual provisions that give Donuts an unreviewable and effectively unlimited right to suspend domain names—causing websites and other internet services to disappear.

He pointed to Donuts’ trusted notifier program with the Motion Picture Association, which streamlines the takedown of domains used for pirating movies, as an example of a registry’s power to censor.

Donuts runs gTLDs including ones with social benefit meanings that the EFF is particularly concerned about, such as .charity, .community, .fund, .healthcare, .news, and .university.

Stoltz also makes reference to the Domain Protected Marks List, a Donuts service that enables trademark owners to block their marks, and variants, across its entire portfolio of 240+ gTLDs.

In effect, this lets trademark holders “own” words and prevent others from using them as domain names, even in top-level domains that have nothing to do with the products or services for which a trademark is used. It’s a legal entitlement that isn’t part of any country’s trademark law, and it was considered and rejected by ICANN’s multistakeholder policy-making community.

The DPML is not unique to Donuts. Competitors such as UNR and MMX have similar services on the market for their gTLDs.

When Stoltz raised the EFF’s concerns at last week’s ICANN meeting, CEO Göran Marby basically shrugged them off, saying he didn’t understand why one PE firm buying an asset off another PE firm was such a big deal.

I have to say I agree with him.

Ethos came under a lot of scrutiny last year when it tried to buy .org manager Public Interest Registry, turning it into a for-profit entity, generating cash for Ethos’ still-undisclosed backers.

(This week, Ethos disclosed in a press release that its investors include massive hedge funds The Baupost Group and Neuberger Berman “among others”, which appears to be the first time these names have been mentioned in connection with the company).

But a pretty good case could be made that .org is a unique case, that has had a non-profit motive baked into its DNA for decades. That does not apply to Donuts, which was a profit-making venture from the outset.

It’s not entirely clear why the EFF is suddenly concerned that Donuts will start exercise its contractual right-to-suspend more frequently under Ethos than under Abry. Stoltz wrote:

As we learned last year during the fight for .ORG, Ethos expects to deliver high returns to its investors while preserving its ability to change the rules for domain name registrants, potentially in harmful ways. Ethos refused meaningful dialogue with domain name users, instead proposing an illusion of public oversight and promoting it with a slick public relations campaign. And private equity investors have a sordid record of buying up vital institutions like hospitals, burdening them with debt, and leaving them financially shaky or even insolvent.

Even with the acquisition passing through ICANN easily, the EFF wants Donuts to change its contracts to make it more difficult for the company to suspend domain names on a whim.

I believe the language causing the controversy comes from anti-abuse policies in the Public Interest Commitments found in almost all Donuts’ contracts with ICANN, which state in part:

Registry Operator reserves the right, at its sole discretion and at any time and without limitation, to deny, suspend, cancel, or transfer any registration or transaction, or place any domain name(s) on registry lock, hold, or similar status as it determines necessary for any of the following reasons:

a. to protect the integrity and stability of the registry;

b. to comply with any applicable laws, government rules or requirements, requests of law enforcement, or any dispute resolution process;

c. to comply with the terms of this Registry Agreement and the Registry Operator’s Anti-Abuse Policy;

d. registrant fails to keep Whois information accurate and up-to-date;

d. domain name use violates the Registry Operator’s acceptable use policies, or a third party’s rights or acceptable use policies, including but not limited to the infringement of any copyright or trademark; or

e. as needed during resolution of a dispute.

As a voluntary PIC, this language is unique to Donuts, though other registries have similar provisions in their registry agreements.

ShortDot bought another gTLD. Guess what .sbs stands for now?

Growing new gTLD portfolio registry ShortDot has acquired another unwanted dot-brand, .sbs, which it intends to repurpose as an open, generic TLD.

.sbs was originally owned by SBS, for Special Broadcasting Service, an Australian public-service broadcaster. But the company never used it.

Now, while launch plans are still in development, ShortDot intends to relaunch .sbs to mean something entirely different, much as it recently did with .cfd.

“.sbs will be branded as shorthand for ‘Side by Side’, perfect for social causes, charitable organizations and other philanthropic initiatives,” ShortDot COO Kevin Kopas told us.

That does not appear to be a meaning of the acronym in common usage.

ShortDot is currently two weeks away from general availability for its next most-recent acquisition, .cfd, which originally stood for the financial term “contracts for difference” but is now being marketed as “clothing and fashion design”.

The company, best known for high-volume .icu, which has sold and lost over five million registrations over the last two years, now has five gTLDs in its stable, including unused dot-brand .bond and .cyou.

.sucks mystery deepens. Who the hell is Pat Honeysalt?

Another two .sucks domain names registered by the gTLD’s most prolific registrant have been found to be cases of cybersquatting, but now the squatter’s true identity is becoming more opaque.

In two recently decided UDRP cases before WIPO, registrant Honey Salt Ltd was found to have cybersquatted by registering and offering for sale bfgoodrich.sucks, uniroyal.sucks and tetrapak.sucks.

While earlier cases filed with the Czech Arbitration Forum had identified Honey Salt as a Turks & Caicos company, the latest few WIPO cases say it is a UK-based company.

However, searches at UK Companies House do not reveal any company matching that name.

The latest WIPO cases also identify an individual allegedly behind said company as a respondent, one “Pat Honeysalt”.

That’s either a pseudonym, or we’ve found one of those people who have somehow managed to keep their name out of Google’s index despite being well-funded and tech-savvy.

Honey Salt is believed to be the registrant of thousands of .sucks domains, all matching the trademarks of big companies, which all point to Everything.sucks, a wiki-style web site comprising scraped third-party criticism targeting the brands in question.

Its defense in its UDRP cases to date has been that it is providing non-commercial free speech criticism, and that the inclusion of “.sucks” in the domain means users could not possibly believe the site is officially sanctioned by the brand.

All but one UDPR panel has so far not believed this defense, with panelists pointing out that the domains in question are usually listed for sale on the secondary market (sometimes at cost, sometimes at an inflated price).

They further point out that the criticism displayed on the Everything.sucks site was written by third parties, often prior to the registration of the domain in question, so Honey Salt cannot claim to be exercising its own free-speech rights.

Honey Salt is represented in its UDRP cases by the very large US-based law firm Orrick, Herrington & Sutcliffe, which also represents .sucks registry Vox Populi.

Motion to fire five Nominet directors passes in tight vote

Nominet’s members this afternoon voted to fire five of the .uk registry’s directors, including its chair and CEO, in an unexpectedly tight poll.

There were 2,432,105 votes in favor of the motion to fire Mark Wood, Eleanor Bradley, Ben Hill and Jane Tozer, compared to 2,179,477 against, which works out to 52.74% for and 47.26% against.

Members get allotted votes according to how many domains under management they have, capped at 3% of the total cross-membership vote count.

In the end, it appears that the vote was swung by a small handful of larger registrars. Tucows and Namecheap were the largest registrars to say they would vote for the board cull.

Turnout was 53.5% of eligible voters, which I gather is extraordinarily high for a Nominet member vote. The full results are here (pdf).

The original motion also named CEO Russell Haworth, but he quit his board seat and executive role yesterday.

Bradley and Hill, respectively managing director of the registry and CFO, have left the board but keep their staff jobs.

Rob Binns is now acting chair, Nominet said.

The vote took place at an Extraordinary General Meeting held virtually this afternoon, which was called for after 5% of Nominet’s registrar/domainer members signed a petition at PublicBenefit.uk.

The campaign was orchestrated by Simon Blacker of the registrar Krystal Hosting, reflecting growing displeasure among members about Nominet’s strategic direction and lack of member engagement.

After the result was announced this hour, Blackler was quick to hail it as “a watershed moment in Nominet’s history”, saying that it “demonstrates the resolve of the membership to restore its original purpose”, in a letter (pdf) to the “remnant” board.

He went on to call for the campaign’s original two picks for chair and vice-chair replacements — Sir Michael Lyons and Axel Pawlik — to be appointed to the board on an interim basis.

The EGM, which lasted for about an hour, saw directors repeatedly acknowledge and occasionally apologize for taking too long to recognize the breadth and depth of members’ concerns, promising to turn things around.

The key theme to emerge was that the company is now on the same page as its members and is committed to addressing their concerns, but that eliminating almost half of the 11-person board would delay these actions by months.

Wood also reiterated that the threat of UK government intervention is real, should it be perceived that Nominet — a piece of critical infrastructure in all but name — was becoming unstable.

The EGM result was due around 1800 UTC but was delayed by more than three hours, apparently due to the higher than expected turnout.

Nominet boss jumps before he is pushed

With the almost inevitable prospect of being fired by Nominet’s membership this afternoon, CEO Russell Haworth yesterday quit the company.

He will leave both the board of directors and the corner office after a “short transition” and by “mutual consent”, the board announced. Interim leadership will be announced later.

Chair Mark Wood said in a statement: “The board appreciates his decision to step down now at a time when it is clear the company needs to consider its future direction.”

The announcement came a day before Nominet, the .uk registry, holds an Emergency General Meeting called by its membership of registrars and domainers, unhappy with the direction the company has taken over the five years of Haworth’s leadership.

He has faced criticism for diversifying the business outside of core registry services, inflating his own salary, increasing domain prices, ignoring member input, and slashing the amount of money given to public benefit causes.

Wood’s own position is still precarious — the EGM, which came about after a petition at PublicBenefit.uk secured the support of 5% of Nominet’s members, will in a matter of hours consider a motion to fire Haworth, Wood and three other directors.

A second motion, to install two new hand-picked directors who promised to reconfigure the registry’s strategy, did not make the agenda as Nominet says it is not compatible with the company’s own rules on director selection.

With Haworth’s departure evidently some kind of 11th-hour queen sacrifice, Wood made one last public plea to the PublicBenefit.uk campaign, which is led by Krystal Hosting’s Simon Blackler, to back off.

He told members that Nominet has already moved to address many of their concerns: freezing (although not lowering) domain prices, freezing board/executive compensation, donating more profit to worthy causes, and creating new channels for membership engagement. He wrote:

Nominet is not a standard company. It is a membership organisation, and the members need to buy into the company’s strategy. It is clear many do not.

Simon Blackler’s campaign tapped into this discontent, and we have seen his support grow. At the same time, I have also had the opportunity to speak with a large number of members of different types and sizes all around the world. I have heard consistently that Nominet should focus on registry, that they want better member involvement in decision-making, and that more of our financial reserves should be devoted to public benefit activity. That input should set the framework for where Nominet moves next. And the journey should begin at once.

…

With the vote now upon us, I think it no longer really matters which way the result goes. The campaign has had its desired impact, reinforced by the dialogue we have had with so many members. We are all moving in the same direction and aiming to achieve the same objectives.

He went on to double-down on claims that the UK government may exercise its decade-old statutory powers to step in and take over the registry, if it detects the company has been destabilized.

I was not scaremongering in warning that government are also watching developments very closely. The .UK registry and our cyber platforms are key parts of critical national infrastructure, and they cannot be put at risk from internal upheaval at Nominet. We have been questioned in detail about developments and have been told bluntly that the government is dusting off its intervention powers under the 2010 Digital Communications Act. We must tread carefully.

The last-minute olive branch and warning combo is probably not enough to save Wood’s bacon, however.

On Twitter, the PublicBenefit.uk campaign this morning continued to call for “the immediate appointment of Sir Michael and Axel Pawlik”, the two men it backs to become chair and vice-chair respectively.

The members-only EGM will be held at 1500 UTC today. PublicBenefit has secured the support of almost 30% of members’ voting rights, including those of large registrars Tucows and Namecheap, but it only needs a simple majority of those who actually show up to the (virtual) meeting today in order to get its resolution passed. Such meetings are historically lightly attended.

Watch: the exact moment Nominet’s CEO sealed his fate

With Nominet CEO Russell Haworth set to lose his job on Monday, the chain of events that led to his ouster can probably be traced back to a single statement made last year, which was happily caught on camera.

At the company’s Annual General Meeting last September, Haworth announced the closure of the member discussion forum it had hosted on its own web site for many years.

He said the forum was “dominated by a handful of posters, and has increasingly become aggressive and hostile, not least towards our staff”.

The plug was pulled on the site immediately, mid-speech, driving active members into a rage.

One unimpressed member was Simon Blackler, CEO of Krystal Hosting, who later went on to start the PublicBenefit.uk campaign, whose supporters are set to ouster five directors on Monday.

Blackler told The Register recently that the “deliberately spiteful” forum closure was the final straw after years of complaints about Haworth’s leadership.

Here’s the video of Haworth’s speech, cued up to the time-code when he seals his fate:

Restoring the old forum was one of a raft of measures Nominet recently said it would introduce in order to respond to member concerns and stave off the boardroom cull. But that was apparently too little too late.

Stick a fork in Nominet’s leadership. Tucows votes to fire half the board

Tucows has become the latest registrar to say it will vote to fire five of Nominet’s 11 directors, including its CEO and chair, making the success of the ongoing member-driven coup pretty much inevitable.

The company said yesterday that it has already voted for the PublicBenefit.uk campaign’s motion, to be considered at the .uk registry’s Emergency General Meeting on Monday.

Tucows is Nominet’s fourth-largest registrar, with 381,468 domains under management. Its voting rights are capped at 3% of the total.

PublicBenefit.uk now says it has 29.1% of all votes backing its campaign, with 473 members signed up.

Because the threshold to pass its resolution is a simple majority of those who actually turn out to vote on the day, the likelihood of the five directors surviving the EGM are now surely negligible.

The first motion kicks out CEO Russell Haworth, chair Mark Wood, CFO Ben Hill, registry managing director Eleanor Bradley and appointed non-executive director Jane Tozer.

The second, which Nominet refused to put on the ballot, would have appointed two new directors: Sir Michael Lyons, who will serve as chair, and Axel Pawlik, deputy chair. Lyons is a former chair of the BBC Trust, who in 2015 oversaw a review into Nominet’s corporate governance. Pawlik is a former MD of European IP address registry RIPE-NCC.

Both have promised to refocus Nominet by abandoning its attempts to diversify into commercial areas such as cybersecurity, while also reducing .uk wholesale prices and donating more of its profits to public benefit causes.

In throwing its weight behind the resolution, Tucows’ director of domains Ashley La Bolle said in a blog post:

Most registries, but particularly country code registries are, or should be, very profitable operations. A country code TLD is also a public asset and an important component of a nation’s critical infrastructure. The registry should have a narrow and focused mandate, deliver a stable and secure service, operate in a risk-averse manner, and manage costs appropriately. As a public asset, surplus funds from the operation of a registry should be delivered to thoughtful and relevant public benefit initiatives, while also containing and reducing costs for the millions of businesses and consumers that use and rely on the domain names.

It’s the second of Nominet’s top 10 registrars to back PublicBenefit.uk, after #7 Namecheap, which has 201,355 .uk names under management.

The Internet Commerce Association, which represents the interest of domain investors but is not a Nominet member, said it took no position on the resolution, but broadly supported the overarching goals:

The ICA urges Nominet members to support efforts to restore Nominet’s core mission to operate the registry at cost as a not-for profit. Nominet’s management should never raise registration fees beyond what it takes to operate the registry in a prudent manner, with any excess revenue being directed to worthy causes and not to growing the breadth of Nominet’s limited mandate.

Those Nominet members who have pledged support for the board shakeup are being urged to give their voting proxy to Simon Blackler, who runs the registrar Krystal Hosting and initiated the PublicBenefit.uk campaign, before close of business UK time today.

Blackler says that almost all of these members have already voted.

It’s going to take an unprecedented turnout of Nominet’s remaining membership, with the vast majority opposed to the firings, to save these five directors at this point.

UPDATE: This article was updated shortly after its original posting to clarify that Nominet had refused to put the campaign’s second motion on the ballot.

Donuts adds another TLD to its stable as Richemont finally bows out of new gTLD program

Luxury goods maker Richemont, an early and strong proponent of the new gTLD concept, has got rid of the final string of the 14 it originally applied for.

According to ICANN records, the registry agreement for .watches was officially transferred to Afilias at the end of December, one day before it was in turn acquired by Donuts.

The domain nic.watches current resolves to a placeholder bearing the Afilias branding.

Richemont, the company behind luxury brands such as Cartier and Piaget, now has no TLDs left.

It had applied for nine dot-brands, along with five generic dictionary terms that it at first intended to maintain as single-registrant spaces, before that use case was banned by ICANN.

At the start of the decade, the company was an enthusiastic endorser of new gTLDs, even sending speakers to conferences to promote the concept.

Richemont was also the first registrant of second-level domains in third-party new gTLDs, when it registered Arabic versions of some of its famous brands in December 2013.

But its enthusiasm waned gradually over the last eight years.

Its dot-brands were discarded in tranches, either during the application process or after contracting. Donuts beat it to .jewelry at auction, and it terminated its contracts for Chinese versions of .jewelry and .watches last year.

There’s not much money in internationalized domain names, so now it seems likely these Chinese IDNs were shopped around but failed to find a buyer.

.watches, however, is right in Donuts’ wheelhouse, a niche generic English string related to a specific product or service.

Last month, I reported that Donuts had acquired .markets, .forex, .broker and .trading from Boston Ivy as it exited the new gTLD game, while letting the less-attractive .spreadbetting die on the vine.

As .gov changes hands, would Verisign run it for free?

The .gov top-level domain is moving for the first time since 1997, and the new owner is promising some pricing changes from next year.

The US General Services Administration has been running .gov, one of the original gTLDs, for almost a quarter-century, but next month it will be taken over by the Cybersecurity and Infrastructure Security Agency.

No changes have been made at IANA yet, but CISA is talking of the handover as if it is a done deal.

It will be the first time ICANN has been asked to redelegate what is essentially an uncontracted gTLD with some of the characteristics of a ccTLD. To be honest, I’ve no idea what rules even apply here.

The move was mandated by the DOTGOV Act of 2019, which was incorporated in a recently passed US spending bill.

Legislators wanted to improve .gov’s usefulness by increasing its public profile and security.

The bill was quite adamant that .gov domains should be priced at “no cost or a negligible cost”, but there’s a catch — Verisign runs the technical infrastructure for the domain, and currently charges $400 per domain per year.

According to CISA, “The way .gov domains are priced is tied closely with the service contract to operate the TLD, and change in the price of a domain is not expected until next year.”

So we’re looking at either a contract renegotiation or a rebid.

Frankly, given the really rather generous money-printing machine the US government has granted Verisign with its perpetual right to run .com and increase its profit margins in most years, it seems to me the company should be running it for free.

The .gov zone currently has domains measured in the low thousand.

Correction: UNR’s trademark block service

The registry or registries that buy UNR’s portfolio of new gTLDs at its firesale auction next month will be obliged to honor domains blocked by subscribers to its UniEPS brand protection service.

That’s contrary to what I reported yesterday, which was pretty much the opposite. I apologize for the error.

I asked UNR CEO Frank Schilling for comment about the post-auction UniEPS service, but did not receive a reply. Today, I learned that Schilling had in fact sent a lengthy reply, but it wound up in my email spam folder. Apparently my emails to him also wound up in his spam folder. The filtering gods clearly do not approve of our relationship.

According to Schilling, bidders for each of the 23 auctioned TLDs have been told “blocked names have to remain blocked, banned, or reserved after acquisition, even if they do not participate in our blocking service”.

Registrars were told:

Should an auction winner elect to withdraw the Asset(s) from UNR’s blocking services, the blocked domains will have to remain blocked, reserved, or banned in the acquired Registries until the expiry dates below. This is no different than a new owner honoring prepaid domains under management with expiry dates in the future. Once a block expires, the associated domains can be released for any registrant to purchase (fees from future registrations will be paid to the new owner).

Schilling also said that UNR is forgoing revenue from UniEPS auto-renews after March 15 until the gTLDs change hands. The new owners will be able to cancel these free renewals, he said.

The new owners will be able to continue to use UniEPS if the gTLDs remain on its registry platform. They could also choose to migrate them to their own blocking service, should they have one.

UniEPS, like other products on the market, blocks trademarks and variants such as IDN homographs from registration. It works out cheaper than defensively registering domains, but the domains cannot be used.

UNR, the former Uniregistry, will auction all of its 23 gTLD contracts April 28, as the company refocuses on back-end registry services.