Governments call for ban on gTLD auctions

Governments are calling for a ban on new gTLD contention sets being settled via private auctions, a practice that allowed many tens of millions of dollars to change hands in the last application round.

ICANN’s Governmental Advisory Committee said in its ICANN 77 communique that it formally advises ICANN: “To ban or strongly disincentivize private monetary means of resolution of contention sets, including private auctions.”

Private auctions typically see the losers split the winner’s winning bid among themselves. The GAC endorsed the At-Large Advisory Committee’s recommendation that applicants should be forced to ICANN-run “last resort” auctions, where ICANN gets all the money, instead.

The concern is that companies with no intention of actually operating a gTLD will file applications purely in order to have a tradeable asset that can be sold to competing applicants for a huge profit.

In the 2012 round, 224 contention sets were settled in private, often via auctions. ICANN not only allowed but encouraged the practice.

For example, publicly listed portfolio registry Minds + Machines disclosed tens of millions of income from losing private auctions, some of which was reinvested into winning auctions for gTLDs that it did intend to run.

Another applicant, Nu Do Co, did not win a single auction it was involved in, with the exception of the ICANN-run “last resort” auction for .web, where its winning $135 million bid was secretly funded by Verisign.

In the case of .web, rival bidders urged NDC to go to private auction until almost the last moment, eager to get a piece of the winning bid. It remains the subject of legal disputes to this day.

The current GNSO “SubPro” policy recommendations do not include a ban on private settlements, instead saying that applicants should affirm that they have a “bona fide” intent to operate the TLD, under penalty of unspecified sanctions if they lie.

The recommendations include a set of suggested red flags that ICANN should look out for when trying to determine whether an applicant is game the system, such as the number of applications filed versus contention sets won.

It’s pretty vague — the kind of thing that would have to be ironed out during implementation — and the ICANN board of directors has yet to formally approve these specific recommendations.

The GAC’s latest advice also has concerns about the “last resort” auctions that ICANN conducts, which see ICANN place the winning bid in a special fund, particular with regards non-commercial applicants.

The GAC advised ICANN: “To take steps to avoid the use of auctions of last resort in contentions between commercial and non-commercial applications; alternative means for the resolution of such contention sets, such as drawing lots, may be explored.”

Some previous ways to mitigate contention gaming include Vickrey auctions, where every applicant submits a high bid at the time of application and the applicant with the highest bid pays ICANN the amount of the second-highest bid.

Bidding before one even knows whether the gTLD string will be subject to contention is seen as a way to dissuade applicants from applying for strings they don’t really want.

ICANN directors said repeatedly at ICANN 77 last week that the Org will be hiring an auctions expert to investigate the best way to handle auctions and reduce gaming.

Closed generics and IDNs debates are big drag on new gTLDs

As ICANN 77 officially kicks off in Washington DC today, the issues of closed generics and IDNs have already emerged as big drag factors on the launch of the next new gTLD application round.

During a day-long “day zero” session yesterday, the community heard that the absolute fastest the GNSO will be able to make policy on closed generics is 96 weeks — over 22 months — using its “expedited” Policy Development Process.

Meanwhile, making policy on internationalized domain names — mainly, how to handle string similarity conflicts in non-Latin scripts — is not expected to be done until March 2026 at the earliest. And that’s through an “expedited” PDP that has already been running for over two years.

The predicted closed generics timetable (on page 16 of this PDF presentation) is actually relatively aggressive compared to the two previous EPDPs (on post-GDPR Whois policy) that the GNSO has previously completed.

It only calls for 36 weeks — about eight months — for the actual working group deliberations, for example, compared to the 48 weeks the equally controversial Whois EPDP took a few years ago.

But the expected duration prompted some criticism yesterday from those wondering why, for example, a “call for volunteers” needs to take as long as three months to carry out.

The timetable was written up prior to the publication over the weekend of a draft framework for closed generics (pdf), which lays out a few dozen principles that should be taken into account in subsequent EPDP work.

With what looks like a certain amount of wheel-reinvention, the document describes a points-based system for determining whether an applicant is worthy of a closed generic. It seems to be based quite a lot on the process used to assess “Community” applications in the 2012 round.

The framework was created in private over the last six months by a cross-community group of 14 people from the GNSO and Governmental Advisory Committee. Chatham House rules applied, so we don’t know exactly whose opinions made it into the final draft. But it exists now, and at first glance it looks like a decent starting point for a closed generics policy.

The major issue is that the work, at its core, is about predicting and preemptively shutting down all the ways devious corporate marketing people might try to blag themselves a closed generic for competitive or defensive purposes, rather than for the public interest, and I’m not sure that’s possible.

Discussion on closed generics will continue this week at ICANN 77, including a session that starts around about the same time I’m hitting publish on this article.

Progress made on next new gTLD round rules

Pace towards finalizing the details of the next new gTLD application round is picking up, with a group of policy-makers close to overcoming some of the ICANN board’s concerns about the program.

A so-called “small team” of GNSO members, aided by a couple of ICANN directors, have drafted a set of recommendations aimed at helping the board approve the 38 community recommendations it has not yet adopted.

The board approved 98 new gTLD “Subsequent Procedures” policy recommendations in March, but was hesitant on issues such as the proposed registry back-end evaluation program, round-based applications, and content policing.

The board had raised the specter of a first-come, first-served model for new gTLD applications, something the community roundly rejected during the Policy Development Process for the next rounds.

Directors in the small group have since clarified that they’re really looking for a “steady state” application process, that may or may not involve FCFS, in order to make planning, hiring and software development more predictable.

There seems to be no question of the next application opportunity being anything other than a round-based process.

Nevertheless, it’s now possible that the GNSO may throw the board a bone by suggesting a PDP that would look into how the new gTLD program could operate in a “steady state” over the long term.

Content policing is another issue that has caused the board pause.

SubPro and the GNSO have recommended that registries be able to add Registry Voluntary Commitments — promises to ban certain types of content from their zone, for example — to their ICANN contracts.

But the board is worried that this may break its 2016 bylaws, which demand ICANN not get involved in content policing, even though the similar Public Interest Commitments from the 2012 round are enforceable.

The GNSO and board currently seem to be leaning towards a bylaws amendment to address RVCs, but it will be a bit of a tightrope, language-wise, to keep ICANN on its ostensibly technical mandate.

The small group has met nine times since late March to try and resolve these and other board concerns ahead of the mid-year ICANN 77 meeting in Washington DC, which starts June 12.

There’s a pretty aggressive schedule of meetings between now and then, with a bilateral between GNSO and board May 22. The board should have the GNSO’s response to its roadblocks by DC, which should allow it to start chipping away at some of the 38 unadopted recommendations.

Washington DC picked for ICANN 77

ICANN is set for a rare visit to the mainland USA for one of its public meetings next year.

Capital Washington DC has been picked for ICANN 77, set to run 12-15 June, 2023, according to a vote of the board of directors published today.

It will be the first time ICANN has summoned its hordes to its native shores since 2014, when it held a meeting in Los Angeles.

Seattle had been picked for last October’s ICANN 73, but it was cancelled due to pandemic travel restrictions.

ICANN rotates its meetings through five geographic regions, and recent North American meetings have meant Canadian and Puerto Rican venues.

It will be the first time ICANN has picked DC for a public meeting. It has an office there.