One year on, Namecheap still fighting aborted .org takeover and may target GoDaddy and Donuts next

Even though Ethos Capital’s proposed takeover of Public Interest Registry was rejected last May, registrar Namecheap is still doggedly pursuing legal action against ICANN’s handling of the deal, regardless.

The Independent Review Process complaint filed last February is still active, with Namecheap currently fighting a recent ICANN motion to dismiss the case.

The company is also demanding access to information about GoDaddy’s acquisition of Neustar and Donuts’ acquisition of Afilias, and is threatening to file separate actions related to both those deals.

Namecheap has essentially two beefs with ICANN. First, that it should not have lifted price caps in its .org, .biz and .info registry contracts. Second, that its review of Ethos’ bid for PIR lacked the required level of transparency.

ICANN’s trying to get the IRP complaint thrown out on two fairly simple grounds. First, that Namecheap lacks standing because it’s failed to show a lack of price caps have harmed it. Second, that it rejected the PIR acquisition, so Namecheap’s claims are moot.

In its motion to dismiss (pdf), its lawyers wrote:

Namecheap’s entire theory of harm, however, is predicated on the risk of speculative future harm. In fact, nearly every explanation of Namecheap’s purported harm includes the words “may” or “potential.” Namecheap has not identified a single actual, concrete harm it has suffered.

…

Namecheap’s claims related to the Change of Control Request should be dismissed because ICANN’s decision not to consent to the request renders these claims moot
and, separately, Namecheap cannot demonstrate any harm resulting from this decision.

In December, Namecheap had submitted as evidence two analyses of its business prospects in the event of registry price increases, one compiled by its own staff, the other prepared by a pair of outside expert economists.

While neither shows Namecheap has suffered any directly quantifiable harm, such as a loss of revenue or customers, Namecheap argues that that doesn’t matter and that the likelihood of future harm is in fact a current harm.

A mere expectation of an increase in registry prices is sufficient to show harm. This is because such expectation reduces Namecheap’s expected profits and its net present value.

It further argues that if Namecheap was found to not have standing, it would give ICANN the ability to evade future IRP accountability by simply adding a 12-month delay to the implementation of controversial decisions, pushing potential complainants outside the window in which they’re able to file for IRP.

On the PIR change of control requests, Namecheap says it’s irrelevant that ICANN ultimately blocked the Ethos acquisition. The real problem is that ICANN failed in its transparency requirements related to the deal, the company claims.

The fact that ICANN withheld its consent is no excuse for refusing to provide full transparency with respect to the actions surrounding the proposed acquisition and ICANN’s approval process. Namecheap’s claims relate to the non-transparent process; not the outcomes of such process. Irrespective of the outcome, lack of transparency increases the level of systemic risk in Namecheap’s business environment.

…

How did ICANN come to its decision? Was an imminent request for a change of control known to ICANN, when it took the decision to remove the price control provisions? What was discussed in over 30 hours of secret meetings between ICANN org and the Board? What discussions took place between ICANN, PIR and other entities involved? All these questions remain unanswered

Namecheap refers to two incidents last year in which ICANN hid its deliberations about industry acquisitions by conducting off-the-books board discussions.

The first related to the PIR deal. I called out ICANN for avoiding its obligation to provide board meeting minutes in a post last May.

The second relates to the board’s consideration of Donuts’ proposed (and ultimately approved) acquisition of Afilias last December. Again, ICANN’s board discussed the deal secretly prior to its official, minuted December 17 meeting, thereby avoiding its transparency requirements.

In my opinion, this kind of bullshit has to stop.

Namecheap is also now threatening to bring the Afilias deal and GoDaddy’s acquisition of Neustar’s registry business last April into the current IRP, or to file separate complaints related to them, writing in its response to ICANN’s motion (pdf):

Namecheap seeks leave to have ICANN’s actions and inactions regarding its consideration of the Neustar and Afilias changes of control reviewed by this IRP Panel. If, per impossibile such leave is not granted, Namecheap reserves all rights to initiate separate proceedings on these issues.

The deals are similar because both involve the change of control of legacy gTLD contractors with millions of domains under management that have recently had their price caps lifted — Afilias ran .info and Neustar ran .biz.

Defensive windfall on the cards for .spa? It’s not just for spas any more

Forthcoming new gTLD .spa has published its planned launch dates and registrations policies, and it’s not just for spas any more.

Asia Spa and Wellness Promotion Council, the registry, has informed ICANN that it plans to take .spa to sunrise for 30 days starting April 20 and expects to go to general availability around the start of July.

But despite being a “Community” gTLD under ICANN rules, it appears to be also marketing itself at any Italian company that uses the S.p.A corporate suffix, which is generally equivalent to the US Inc/Corp and UK Plc.

According to its eligibility criteria (pdf), under the heading “Coincidental Community Guidelines”, proof of an Italian business address should be enough for any SpA company to qualify to register.

The registry’s web site at nic.spa currently says:

Apart from the spa and wellness industry, .spa can also be a abbreviation to represent:

• Società per Azioni (a form of corporation in Italy, Public Limited Companies By Shares)
• Sociedad por acciones (Joint-stock company in South American Countries)

This offers a great opportunity for entitles in Italy and South American Countries to registered a wonderful name.

This is interesting, because ASPWC applied for .spa as a Community applicant dedicated to the spa and wellness industry.

The primary reason it’s getting to run .spa rather than rival applicant Donuts is that ASPWC won a Community Priority Evaluation, enabling it to avoid a potentially costly auction against its deeper-pocketed competitor.

There’s no mention of Italians or South Americans in its 2015 CPE result (pdf).

Donuts fought the CPE result in ICANN’s Cooperative Engagement Process for three years, but eventually backed away for unknown reasons.

In its original application, ASWPC spends a lot of time discussing its “intended use” of .spa and possible overlap with other meanings of the string. Among this text can be found:

The use of “S.p.A.” as a short form for the Italian form of stock corporation: “Società Per Azioni” is also relatively much less prevalent than the word as intended for the spa community. Furthermore, a more proper and popular way of denoting the form of corporation is “S.p.A.” with the periods included. While this is an important usage of the string “SpA”, the Registry believes that it should not take away from the significant meaning of the word “spa” in its intended use for the spa community as a TLD. Furthermore, additional preventive measures can be put in place to mitigate against any concerns for abusive utilization of the TLD in this manner.

I could find no text explicitly ruling out the Italian corporate use in the application, nor could I find any indication that it was part of the hard-C “Community” upon whose behalf ASWPC was applying for, and eventually won, the gTLD.

The application does seem to envisage some kind of reserved names list that could include S.p.A companies, but that doesn’t appear to be what the registry has in mind any more.

Donuts punter welcomes our new alien overlords in December premium sale

When humanity finally confirms the existence of intelligent extraterrestrial life, what’s the new gTLD domain name you’d want to have in your portfolio?

Why, first.contact, of course. The domain name was registered with premium pricing from Donuts in December, according to registry data published this week, and is currently listed for resale with a $1 million price tag.

If domaining is often likened to gambling, first.contact has to be one of the biggest lottery tickets of them all — you’re betting on the biggest news story in human history breaking during your lifetime.

The chances of a final solution to the Fermi paradox may be unknowable, but a million bucks might not be an unreasonable ask if the gamble pays off.

I like the name, anyway, even if it’s more likely to be a drain on the registrant’s resources for the rest of his life.

It’s one of three .contact domains Donuts counted among its top 20 premium-priced sales for December, the others being my.contact and business.contact.

The company took over .contact from Top Level Spectrum in 2019 and took it to general availability last month.

.contact does not rank in the top 10 of Donuts’ portfolio of gTLDs for the month.

While Donuts does not publish sale prices for its premiums, the top name for December appears to have been category-killer office.furniture.

Donuts acquisition of Afilias closes, integration work begins

Donuts’ acquisition of Afilias closed without incident on December 29, the companies announced last week.

The registries said that registrants and registrar partners should not see any immediate disruption, but added that it’s now working on an integration plan that should see some changes over the longer term.

“Our combined teams can now begin developing an integration plan, with a goal of minimizing disruption to those we serve,” Akram Atallah, Donuts’ CEO, said in a press release. “We expect no changes in the short term, and ample notice on any changes that are decided.”

Atallah has previously told DI that it’s likely that Afilias’ owned and operated TLDs will likely be transferred to Donuts’ registry back-end, which is hosted on the Amazon cloud.

He also said that services such as the Domain Protected Marks List, currently available in 240+ Donuts gTLDs, should soon become available in Afilias’ 20-odd.

The deal, for an undisclosed sum, was subject to scrutiny by ICANN, which could have blocked it, but its board of directors considered the merger last month with no resolution passed.

ICANN could block Donuts from buying Afilias

In what appears to be an almost unprecedented move, ICANN is to review Donuts’ proposed acquisition of rival Afilias at the highest level, raising a question mark over the industry mega-merger.

The org’s board of directors will meet Thursday to consider, among other things, “Afilias Change of Control Approval Request”.

It’s highly unusual for a change of control to be discussed at such a high level.

Every registry contract contains clauses requiring ICANN’s consent before a registry switches owners, and it has approved hundreds over the last decade. But the process is usually handled by legal staff, without board involvement.

The only time, to my memory, that the board has got involved was when it withheld consent from .org manager Public Interest Registry earlier this year.

It’s not entirely clear why Afilias has been singled out for special treatment.

It’s probably not due to its status as a legacy gTLD registry operator because of .info — when GoDaddy bought .biz operator Neustar’s registry business earlier this year, there was no such board review.

In addition, the .info contract’s change of control provisions are very similar to those in the standard new gTLD contract.

Could it be due to Donuts executives former ties to ICANN and the perception of a conflict of interest? Again, it seems unlikely.

While Donuts CEO Akram Atallah is former president of ICANN’s Global Domains Division, former ICANN CEO Fadi Chehadé is no longer involved with Donuts owner Abry Partners, having jumped to erstwhile PIR bidder Ethos Capital this July.

Are there competition concerns? It’s a possibility.

Afilias holds the contracts for 24 gTLDs new and legacy, but supports a couple hundred more, while Donuts is contracted for over 240.

But between them, they have barely 10 million domains under management. Donuts isn’t even the market leader in terms of new gTLD registrations.

And ICANN avoids making competition pronouncements like the plague, preferring instead to refer to national competition regulators.

Could ICANN’s interest have been perked by the fact that Afilias is the back-end provider for .org’s 10 million domains, and the proposed Donuts deal comes hot on the heels of the failed PIR acquisition? Again, it’s a possibility.

But none of the dangers ICANN identified in the .org deal — such as pricing, freedom of speech, and the change from a non-profit to for-profit corporate structure — appear to apply here.

There could be technical concerns. Atallah told DI a couple weeks ago that the plan was to ultimately migrate its managed TLDs to its Amazon cloud-based registry.

But moving its clients’ TLDs to a new back-end infrastructure would require their consent — it would be up to PIR and its overlords at the Internet Society to agree to moving .org to the cloud.

I think it’s likely that a combination of all the above factors, and maybe others, are what’s driving the Afilias acquisition to the ICANN boardroom. It will be interesting to see what the board decrees.

Westerdal offloads two more gTLDs to Donuts

Donuts has bulked out its gTLD portfolio yet again, acquiring two more strings from Fegistry and Top Level Spectrum.

ICANN records show that it recently took over the contracts for .observer and .realty.

They’re both launched, active TLDs. Both selling registries are backed by investor Jay Westerdal.

.observer was bought dormant by TLS from the British newspaper of the same name in 2016 and launched the following year with .com-competitive prices.

TLS has been marketing it as a place for news organizations, though it’s unrestricted. Registrations plateaued at about 1,000 a couple of years ago and haven’t seen much movement since.

.realty is a different story.

Fegistry paid ICANN $5,588,888 at a public auction — beating Donuts, in fact — in 2014, and launched it in 2017 with a roughly $300-a-year retail price.

It’s been cruising along with about 2,200 names under management for the last couple of years, until this September and early October, when its zone file shot up to almost 18,000 domains.

This seems to have been the result of a $0.99 promotion at Epik, which has since ended.

One would have to assume that the vast majority of those new domains will be speculative and are unlikely to renew at the full $300 reg fee a year from now.

While the contracts changed hands in late October, it’s inconceivable that Donuts was not aware of the quality of the recent registrations.

It’s not the first time Westerdal’s businesses have sold to Donuts, which took .contact off Top Level Spectrum’s hands in April 2019. That gTLD entered general availability this week.

It’s also handed off responsibility for .forum to MMX, which plans to launch it with a puzzling $1,000 price tag next March, although TLS is still listed as the ICANN contractor.

TLS still runs the controversial gripe site TLD .feedback, along with the unlaunched head-scratcher .pid.

Fegistry is still fighting for .hotel, along with rival applicants, in ICANN’s quasi-judicial Independent Review Process.

Donuts boss discusses shock Afilias deal

Afilias is to spin off its registrar business and also its contested application for the .web gTLD, following its acquisition by Donuts, according to Donuts CEO Akram Atallah.

Speaking to DI last night, Atallah explained a little about how the deal, which creates a registry with about 450 strings under management, came about.

Rather than a straightforward bilateral negotiation, is seems like Afilias was shopping itself around for a buyer. Several companies were invited to bid, and Donuts won. Atallah said he does not know how many, or which, bidders Donuts was competing against.

Afilias was making over $100 million a year in revenue last time its accounts were published in 2017, but its largest gTLDs are in decline and it took a big hit when Public Interest Registry renegotiated its back-end contract for .org in 2018.

The acquisition, the value of which has not been disclosed, does not include Afilias’ registrar or mobile businesses, which Atallah said will be spun off.

He also revealed that the deal does not include Afilias’ .web gTLD application, which came second in an ICANN auction won by a Verisign-backed bidder a few years back.

Afilias is currently waiting for the results of an Independent Review Process case that seeks to overturn the winning $135 million bid and award the potentially lucrative gTLD to Afilias. The case was heard in August and a decision is surely not many months away.

What the deal does include are all of Afilias’ registry assets, including its owned gTLDs and its back-end service provider contracts.

I asked Atallah what the plans are for migrating or integrating the two registry platforms. While Afilias runs its own data centers, Donuts migrated its registry to Amazon’s AWS cloud service earlier this year.

“We have to make sure whatever we do is as painless as possible to our registrar channel and partners,” he said. “We believe that at least on the new gTLDs that they have it will probably be easier for us to move them to our back-end, which is on the cloud already… We’ll probably do that fairly quickly.”

“But remember they have other registries and ccTLDs that don’t own that they run on their back-end, so there’ll be business issues and negotiations there to see what we can do there,” he added.

While he’s not expecting anyone to notice any big changes immediately, Atallah said that over time features such as the companies’ different EPP commands will be merged, and that valued-added services will start to cross-pollinate.

“All of the features we have on our TLDs will migrate to their TLDs and vice versa,” he said.

That means things like the Domain Protected Marks List, a defensive registration service for trademark owners, will start to show up in Afilias gTLDs before long, he said.

I asked about the possibility of layoffs, something that is no doubt worrying staff at both companies right now and seems quite possible given the move to the cloud, but Atallah said it was too early to say. Nothing will change until the deal closes at the end of the year, he said.

“Once we actually close, we’ll sit down with the management of the Afilias registry team and look at all the different assets that we have and try to pick the best in class in technology and services,” he said.

Having seen some mutterings about competition concerns, I put that question to Atallah. He laughed it away, pointing out that, even combined with Afilias, Donuts will have fewer than 15 million domains under management.

Donuts acquires Afilias to create registry giant

Donuts has agreed to acquire Afilias, the two companies have just announced.

The purchase, for an undisclosed sum, will create a registry giant, responsible in one way or the other for over 450 top-level domains.

The deal will not include Afilias’ registrar or mobile software businesses, the companies said.

The acquisition, between two private companies, is expected to close before the end of the year.

Afilias is probably best known for .info, which it has been running for almost two decades. That gTLD has almost 4.7 million domains under management.

It also runs .mobi, .pro and 21 new gTLDs from the 2012 application round, including .global, .green, .pet, .kim and .lgbt.

It acts as the back-end registry provider for over 200 third-party TLDs, the largest of which is .org, and provides DNS resolution services for other TLDs and enterprises.

Donuts owns the largest portfolio of new gTLDs, with 242 in its stable at the last count.

The internet just got its first proper new gTLD of the year, and the timing couldn’t be worse

The DNS root zone has just had its first non-branded TLD delegation of the year, and the midst of a highly virulent pandemic is probably the worst possible time for its niche.

It’s .spa, newly assigned to a Malaysian company called Asia Spa and Wellness Promotion Council.

Spas, of course, are at the top of every government’s list when it comes to sectors that get shut down at the first whiff of virus.

Unlike restaurants and bars, which drove registrations of gTLDs such as .bar in the locked-down second quarter, spa services are not something that can easily be adapted to take-out or home delivery.

.spa has taken this long to reach the root largely due to to a fight with rival applicant Donuts.

ASWPC, backed by spas worldwide and the Belgian government (which claimed geographical protection because spas are named after the town of Spa) applied as a Community Priority Evaluation applicant, and won its CPE.

The company has said it will donate 25% of its profits to the town of Spa.

Donuts fought the CPE decision, preventing ASWPC from proceeding for three years, before backing off without explanation two years ago.

Hopefully, by the time .spa is properly ready to launch, its niche will be approaching some kind of normality.

It’s the fourth root delegation this year, after Amazon’s three dot-brands.

These eight companies account for more than half of ICANN’s revenue

While 3,207 companies contributed to ICANN’s $141 million of revenue in its last fiscal year, just eight of them were responsible for more than half of it, according to figures just released by ICANN.

The first two entries on the list will come as no surprise to anyone — they’re .com money-mill Verisign and runaway registrar market-leader GoDaddy, together accounting for more than $56 million of revenue.

Registries and registrars pay ICANN a mixture of fixed fees and transaction fees, so the greater the number of adds, renews and transfers, the more money gets funneled into ICANN’s coffers.

It’s perhaps interesting that this top-contributors list sees a few companies that are paying far more in fixed, per-gTLD fees than they are in transaction fees.

Binky Moon, the vehicle that holds 197 of Donuts’ 242 gTLD contracts, is the third-largest contributor at $5.2 million. But $4.9 million of that comes from the annual $25,000 fixed registry fee.

Only 14 of Binky’s gTLDs pass the 50,000-name threshold where transaction fees kick in.

It’s pretty much the same story at Google Registry, formally known as Charleston Road Registry.

Google has 46 gTLDs, so is paying about $1.1 million a year in fixed fees, but only three of them have enough regs (combined, about one million names) to pass the transaction fees threshold. Google’s total funding was almost $1.4 million.

Not quite on the list is Amazon, which has 55 mostly unlaunched gTLDs and almost zero registrations. It paid ICANN $1.3 million last year, just to sit on its portfolio of dormant strings.

The second and third-largest registrars, Namecheap and Tucows respectively, each paid about $1.7 million last year.

The only essentially single-TLD company on the list is Public Interest Registry, which runs .org. Despite having 10 million domains under management, it paid ICANN less than half of Binky’s total last year.

The anomaly, which may be temporary, is ShortDot, the company that runs .icu, .cyou and .bond. It paid ICANN $1.6 million, which would have been almost all transaction fees for .icu, which peaked at about 6.5 million names earlier this year.

Here’s the list:

[table id=62 /]

Combined, the total is over $70.5 million.

The full spreadsheet of all 3,000+ contributors can be found over here.