Donuts loses to ICANN in $135 million .web auction appeal

Donuts has lost a legal appeal against ICANN in its fight to prevent Verisign running the .web gTLD.
A California court ruled yesterday that a lower court was correct when it ruled almost two years ago that Donuts had signed away its right to sue ICANN, like all gTLD applicants.
The judges ruled that the lower District Court had “properly dismissed” Donuts’ complaint, and that the covenant not to sue in the Applicant Guidebook is not “unconscionable”.
Key in their thinking was the fact that ICANN has an Independent Review Process in place that Donuts could use to continue its fight against the .web outcome.
The lawsuit was filed by Donuts subsidiary Ruby Glen in July 2016, shortly before .web was due to go to an ICANN-managed last-resort auction.
Donuts and many others believed at the time that one applicant, Nu Dot Co, was being secretly bankrolled by a player with much deeper pockets, and it wanted the auction postponed and ICANN to reveal the identity of this backer.
Donuts lost its request for a restraining order.
The auction went ahead, and NDC won with a bid of $135 million, which subsequently was confirmed to have been covertly funded by Verisign.
Donuts then quickly amended its complaint to include claims of negligence, breach of contract and other violations, as it sought $22.5 million from ICANN.
That’s roughly how much it would have received as a losing bidder had the .web contention set been settled privately and NDC still submitted a $135 million bid.
As it stands, ICANN has the $135 million.
That complaint was also rejected, with the District Court disagreeing with earlier precedent in the .africa case and saying that the covenant not to sue is enforceable.
The Appeals Court has now agreed, so unless Donuts has other legal appeals open to it, the .web fight will be settled using ICANN mechanisms.
The ruling does not mean ICANN can go ahead and delegate .web to Verisign.
The .web contention set is currently “on-hold” because Afilias, the second-place bidder in the auction, has since June been in a so-called Cooperative Engagement Process with ICANN.
CEP is a semi-formal negotiation-phase precursor to a full-blown IRP filing, which now seems much more likely to go ahead following the court’s ruling.
The appeals court ruling has not yet been published by ICANN, but it can be viewed here (pdf).
The court heard arguments from Donuts and ICANN lawyers on October 9, the same day that DI revealed that ICANN Global Domains Division president Akram Atallah had been hired by Donuts as its new CEO.
A recording of the 32-minute hearing can be viewed on YouTube here or embedded below.

ICANN number two Atallah is new CEO of Donuts

Akram Atallah, head of ICANN’s Global Domains Division, has quit and joined Donuts as its new CEO, DI has learned.
According to multiple sources, Atallah’s last day at ICANN was yesterday.
While neither company has announced the move yet, I gather that ICANN staff were informed by CEO Goran Marby today.
The news comes just a month after private equity firm Abry Partners, which counts former ICANN CEO Fadi Chehade among its partners, acquired Donuts for an undisclosed sum.
While the revolving door between industry and ICANN is pretty much continuous, Atallah is probably the highest-profile example since Kurt Pritz in 2012 and Peter Dengate Thrush in 2011.
As head of ICANN GDD, he was responsible for all things gTLD. Before the creation of the role, he was COO.
He was also interim president and CEO of the organization on two occasions, keeping the seat warm prior to the arrival of Chehade and Marby,
Atallah and Chehade also worked together in their pre-ICANN days in the software industry.
Donuts is of course the largest new gTLD registry in terms of TLDs, with 241 in its stable.
I’ve no word yet on where Bruce Jaffe, Donuts’ current CEO, is going, but I’ll update this post when I do.
Jaffe joined Donuts as chief a little over a year ago, replacing founder Paul Stahura.
Presumably, Jaffe was the turnaround guy and with Donuts’ acquisition secured the new owners figured it was time to hire an ops guy.
UPDATE 2022 UTC: Donuts just issued a press release in which it said that Jaffe will remain a senior adviser during the transition. It also said that Atallah starts in his new job November 12.
UPDATE October 10: ICANN said in a statement overnight that VP of DNS industry engagement Cyrus Namazi will head GDD on an interim basis, with support from CTO David Conrad.

CentralNic buys .fans for peanuts

CentralNic has acquired the flailing new gTLD .fans for an undisclosed sum.
The value of the deal was low enough that publicly traded CentralNic was not obliged to disclose the purchase to the market, CEO Ben Crawford confirmed.
The ICANN contract seems to have changed hands — transferred to a CentralNic subsidiary call Fans TLD Ltd — back in August.
We revealed back in May that CentralNic was acting as a caretaker for .fans, and sister TLD .fan, after original registry Asiamix Digital failed to make enough money to keep the business going.
.fan, which Asiamix bought from Donuts but never launched, was sold back to Donuts in June.
Donuts took .fan to sunrise last week and plans to take it to general availability in December.
.fans domains, meanwhile, have been in registrar storefronts since 2015, but the current tally of registered domains is barely above 1,600.
Domains are still selling for around the $100 mark, roughly double the expected retail price of .fan.

Donuts says DPML now covers “millions” of trademark variants as price rockets again

Donuts has added more than a third to the price of its Domain Protected Marks List service, as it adds a new feature it says vastly increases the number of domains trademark owners can block.
The company has added homograph attack protection to DPML, so trademark-owning worrywarts can block variations of their brand that contain confusing non-Latin characters in addition to all the domain variants DPML already takes out of the available pool.
An example of a homograph, offered by Donuts, would be the domain xn--ggle-0nda.com, which can display as “gοοgle.com” and which contains two Cyrillic o-looking characters but is pretty much indistinguishable from “google.com”.
Donuts reckons this could mean “millions” of domains could be blocked, potentially preventing all kinds of phishing attacks, but one suspects the actual number per customer rather depends on how many potentially confusable Latin characters appear in the brands they want to protect.
DPML is a block service that prevents others from registering domains matching or closely matching customers’ trademarks. Previous additions to the service have included typo protection.
The new feature supports Cyrillic and Greek scripts, the two that Donuts says most homograph attacks use.
The company explained it to its registrars like this:

The Donuts system will analyze the content of each SLD identified in a DPML subscription, breaking it down to its individual characters. Each character is then “spun” against Unicode’s list of confusable characters and replaced with all viable IDN “glyphs” supported by Donuts TLDs. This spinning results in potentially millions of IDN permutations of a brand’s trademark which may be considered easily confusable to an end user. Each permutation is then blocked (removed from generally available inventory) just like other DPML labels, meaning it can only be registered via an “Override” by a party holding a trademark on the same label.

While this feature comes at no additional cost, Donuts is increasing its prices from January 1, the second big increase since DPML went live five years ago.
Donuts declined to disclose its wholesale price when asked, but I’ve seen registrars today disclose new pricing of $6,000 to $6,600 for a five-year block.
That compares to retail pricing in the $2,500 to $3,000 range back in 2013.
Hexonet said it will now charge its top-flight resellers $6,426 per create, compared to the $4,400 it started charging when DPML prices last went up at the start of last year. OpenProvider has also added two grand to its prices.
Donuts said the price increase also reflects the growth of its portfolio of gTLDs over the last few years. It now has 241, 25% more than at the last price increase.

Donuts gets bought by former ICANN CEO’s firm

Donuts is to be bought by a private equity firm that has a former ICANN CEO as a partner.
The company, which holds the largest portfolio of new gTLDs, has agreed to be acquired by Boston-based private equity firm Abry Partners for an undisclosed sum.
Not much info about the deal has been released, but one senses an ICANN alum’s hand at the wheel.
Former ICANN chief Fadi Chehade is a partner at Abry, having been initially employed as senior advisor on digital strategy back in 2016 after he left ICANN.
Abry, on its web site, says it focuses its investments on profitable companies, adding:

Depending on the type of fund, we target investments from $20 million to $200 million.
Since Abry’s inception, we’ve developed deep industry expertise in Broadband, Business Services, Communications, Cybersecurity, Healthcare IT, Information Services, Insurance Services, Internet-of-Things, Logistics, Media, and Software as a Service.

Since its formation in 1989, Abry has “completed more than $77 billion of transactions, representing investments in more than 650 properties.”
Donuts was founded by domain veterans Paul Stahura, Jon Nevett, Richard Tindal and Daniel Schindler in order to take advantage of ICANN’s new gTLD program..
It was initially funded by $100 million from Austin Ventures, Adams Street Partners, Emergence Capital Partners, TL Ventures, Generation Partners and Stahurricane.
It currently runs over 200 TLDs, the most populous of which I believe is .ltd, with over 400,000 names.
Donuts is the latest of a series of domain companies to exit via the private equity route, notably following Neustar and Web.com.
Chehade was ICANN’s CEO between 2012 and 2015. While he was not involved in the industry during the new gTLD’s program’s inception, he did oversee its early years.

Donuts confirms six-figure .news buyer used a fake name

Mike Texas is in fact noted conspiracy theorist Mike Adams.
New gTLD registry Donuts confirmed with DI over the weekend that the buyer of six figures worth of “platinum” .news domain names used a fake name.
The company last week said that a company called WebSeed bought registry-reserved names including science.news, climate.news, medicine.news, health.news and pollution.news.
After a small amount of digging, I discovered that these sites were affiliated with a controversial site called Natural News, which is regularly criticized for spreading bogus, anti-science content.
I suspected that “Mike Texas”, the WebSeed CEO quoted railing against “fake news” in Donuts’ press release, was very probably a pseudonym for Natural News owner Mike Adams, who calls himself the “Health Ranger” but peddles theories often characterized as dangerous.
Yesterday, Donuts told us that, following DI’s coverage, it has managed to confirm with Texas that he is in fact Adams. The company has changed its press release accordingly.
I will note that the most compelling piece of evidence connecting Texas to Adams was a pre-GDPR Whois record.

Donuts makes six-figure .news sale to dangerous conspiracy theorist

Donuts has sold a package of “platinum” .news domains to a network of dubious news sites peddling what many describe as dangerous pseudo-scientific nonsense.
A company called WebSeed acquired science.news, food.news, health.news, medicine.news, pollution.news, cancer.news and climate.news from the registry for an undisclosed sum in the six-figure range last December, Donuts said.
It appears that the same buyer has acquired several other presumably non-platinum .news domains, including vaccines.news, nutrients.news, menshealth.news and emergencymedicine.news
The sites have already been developed, incorporating a back catalog of “news” content from other sites under the same ownership, and Donuts reckons searches for “climate news” and “science news” already return the matching domains prominently (they don’t for me, but Google can be fickle).
Unfortunately, the domains seem to have been sold to a leading purveyor of misinformation and conspiracy theories.
That’s right, climate.news now belongs to a climate change denier, vaccines.news belongs to an anti-vaxxer, and medicine.news belongs to somebody who values alternative remedies over science-based medicine.
As far as I can tell, pretty much all of the content on the network of .news domains comes from Natural News, the controversial site owned by “Health Ranger” Mike Adams.
Natural News has been fingered as an “empire of misinformation” and a leading contributor to the “fake news” crisis that has been blighting society for the last few years.
Check out climate.news today to be treated to Adams’ theory that climate change is nothing but a conspiracy peddled by the UN and the mainstream media.
Over on vaccines.news, you’ll find a scaremongering story about how the measles vaccine has killed more people than measles over the last decade.
(Gee, I wonder why measles isn’t killing anyone any more? Could it be that we have a fucking vaccine?).
On medicine.news, Adams himself writes of “PROOF that vaccines target blacks for depopulation”.
And at pollution.news, you’ll find any number of articles discussing the “chemtrails” conspiracy theory.
To be perfectly honest, I’m not scientifically literate enough to debunk most of the content on these sites, but I know quackery when I see it.
Donuts’ press release goes to suspicious pains to point out that the sites’ content is “thoroughly researched” and advertising is “limited and relevant to the sites’ content”.
In fact, the advertising seems in most if not all cases to lead back to Adams’ own stores, where he sells stuff like water purifiers, dietary supplements and alternative medicines.
The Donuts press release also quotes the founder and CEO of WebSeed, one “Mike Texas”.
Now, I have absolutely no evidence whatsoever that Mr Texas is not a real person.
But.
Whois records (remember those?) show that the original registrant of science.news was one Mike Adams of WebSeed LLC, and WebSeed.com, while under privacy for some years, was originally registered to Adams’ Taiwan-based company.
It goes without saying that Donuts, as a neutral registry, is under no obligation whatsoever to police content on the domains it sells. That would be a Bad Thing.
But I can’t help but feel that .news has the potential to take a big credibility hit due to the content of these sites.
Imagine a fox, buying up all the good .henhouse domains. It’s a bit like that.

GoDaddy signs up for basically unrestricted .travel gTLD

Donuts has started to market the now practically prehistoric and newly liberalized gTLD .travel, and it’s signed up GoDaddy to offer domains there.
The registry, which acquired .travel from former owner Tralliance in February, announced a soft relaunch on its blog last week, highlighting that GoDaddy, Name.com and Encirca are now among its registrars.
GoDaddy appears to be only new signing there — Encirca and Name.com have been carrying .travel from long before Donuts got involved and are in fact its two largest registrars.
The big daddy of the registrar space appears to have become interested after Donuts “simplified” the process of registering .travel domains. Donuts said:

Since the acquisition, Donuts has simplified the registration process, enabling registrants to stay on the registrar’s website for the entirety of the registration/checkout process. Donuts believes that this streamlined registration process will increase registrations, as compared to the previous process, which was disjointed and complex for registrants.

What this seems to translate to is: .travel is essentially an unrestricted TLD, despite being applied for in 2003’s round of “sponsored” gTLDs.
If you attempt to register a .travel domain at GoDaddy today, the only additional friction en route to the purchase button is a simple, prominent check-box asking you to confirm you are a member of the travel community.
That’s apparently enough for Donuts to say it has fulfilled the part of its ICANN contract that says it has to carry out a “review of Eligibility prior to completion of all registrations.”
Under its previous ownership, .travel required registrars to bounce their customers to the registry web site to obtain an authentication code during the registration process.
.travel names are still pretty pricey — GoDaddy was going to hit me with a bill of over $110 before I abandoned my cart, and that was just a year-one promotional price.
The gTLD peaked at 215,000 domains 10 years ago but now sits at under 18,000, having seen slight declines every month for the past five years.

Donuts buys back .fan, ignores plural .fans

Donuts has purchased the unlaunched new gTLD .fan from its struggling owner, just three years after selling it.
The company said today that .fan will become its 241st TLD in its portfolio, having inked a deal with Asiamix Digital.
Asiamix also runs the plural .fans, which Donuts has not acquired.
A Donuts spokesperson said the singular variant was the only acquisition considered, but did not say why.
The gTLD has a colorful ownership history, given that it has not even launched yet.
It was originally owned by Donuts, which won it unopposed in the 2012 application round.
The company then transferred it to then-independent Rightside under a deal the two companies had covering about 100 applications.
Rightside then in 2015 briskly sold the contract to Asiamix, which already had the rights to the plural .fans and presumably wanted to reduce market confusion.
For whatever reason, Asiamix sat on .fan and never even announced launch plans.
Rightside was then acquired by Donuts last year.
Donuts’ spokesperson declined to disclose whether the latest re-acquisition was for the same, more, or less than the original 2015 transaction.
Asiamix is currently very likely facing the death of its business, having failed to make a go of .fans.
The plural has never had more than about 1,500 names in its zone file.
Donuts plans to launch .fan in short order, with general availability expected in mid-September. We should be looking at a sunrise period fairly soon.

Donuts freezes .place gTLD ahead of new geofencing rules

Donuts has taken its .place gTLD temporarily off the market as it repurposes the space as a restricted zone for “geofencing” related uses.
That’s right, the biggest gTLD portfolio play and historically staunch advocate of open gTLDs is actually planning to introduce eligibility requirements into a currently unrestricted TLD.
Details are light ahead of a formal announcement, but I’m told all new .place registrants will have to agree to use their domains for geofencing purposes.
This looks a bit like it could be a taste of the “innovation” we were all promised from the new gTLD program.
Geofencing refers to systems that divide the world up into fenced-off virtual parcels of land based on GPS coordinates, enabling location-based services.
It’s an area Donuts has been looking at for a while, having invested in early-stage geofencing company GeoFrenzy, since rebranded as Geo.Network, two years ago.
While Donuts puts its new .place model in place — ICANN and registrars have been given the heads-up — it should not be possible to register any new .place domains.
Major registrars such as GoDaddy, Namecheap, Uniregistry and Donuts-owned Name.com were not returning results for .place domains on their storefronts when I checked over the weekend.
Other registrars did still appear to be offering the names, but I did not attempt to register one to check whether the sale would complete.
I gather that the new eligibility requirements will not apply retroactively, so anyone who currently owns a .place name will get to keep it on an unrestricted basis.
There are around 7,000 active .place domains currently.