.web closer to reality as antitrust probe ends

Verisign has been given the all-clear by the US government to go ahead and run the new gTLD .web, despite competition concerns.
The Department of Justice told the company yesterday that the antitrust investigation it launched almost exactly a year ago is now “closed”.
Verisign’s secret proxy in the 2016 auction, the original .web applicant Nu Dot Co, now plans to try to execute its Registry Agreement with ICANN.
That contract would then be assigned to Verisign through the normal ICANN process.
The .com registry operator today filed this statement with the US Securities and Exchange Commission:

As the Company previously disclosed, on January 18, 2017, the Company received a Civil Investigative Demand from the Antitrust Division of the United States Department of Justice (“DOJ”) requesting certain material related to the Company becoming the registry operator for the .web gTLD. On January 9, 2018, the DOJ notified the Company that this investigation was closed. Verisign previously announced on August 1, 2016, that it had provided funds for Nu Dot Co’s successful bid for the .web gTLD and the Company anticipates that Nu Dot Co will now seek to execute the .web Registry Agreement with ICANN and thereafter assign it to Verisign upon consent from ICANN.

This basically means that Justice disagrees with anyone who thinks Verisign plans to operate .web in a way that just props up its .com market dominance, such as by burying it without a trace.
People clamoring to register .web domains may still have some time to wait, however.
Rival applicant Donuts, via subsidiary Ruby Glen, still has a pending lawsuit against ICANN in California.
Donuts had originally sued to prevent the .web auction going ahead in mid-2016, trying to force Nu Dot Co to reveal who was really pulling its strings.
After the auction, in which Verisign committed to pay ICANN a record-setting $125 million, Donuts sued to have the result overturned.
But in November 2016, a judge ruled that the no-suing covenant that all new gTLD applicants had to sign was valid, throwing out Donuts’ case.
Donuts is now appealing that ruling, however, filing its most-recent brief just a few weeks ago.
Whether that will stop ICANN from signing the .web contract and delegating it to Verisign is an open question. It managed to delegate .africa to ZA Central Registry despite the existence of an ongoing lawsuit by a competing applicant.
If history is any guide, we may see a rival applicant apply for a temporary restraining order against .web’s delegation before long.

How ICANN could spend its $240 million war chest

Schools, pHD students and standards groups could be among the beneficiaries of ICANN’s nearly quarter-billion-dollar new gTLD auction war chest.
But new gTLD registries hoping for to dip into the fund for marketing support are probably shit out of luck.
Those are among the preliminary conclusions of a volunteer working group that has been looking at how ICANN should spend its new gTLD program windfall.
Over 17 new gTLD auctions carried out by ICANN under its “last resort” contention resolution system, the total amount raised to date is $240,590,128.
This number could increase substantially, should still-contested strings such as .music and .gay go to last-resort auction rather than being settled privately.
Prices ranged from $1 for .webs to $135 million for .web.
ICANN has always said that the money would be held separate to its regular funding and eventually given to special projects and worthy causes.
Now, the Cross-Community Working Group on New gTLD Auction Proceeds has published its current, close-to-final preliminary thinking about which such causes should be eligible for the money, and which should not.
In a letter to ICANN (pdf), the CCWG lists 18 (currently hypothetical, yet oddly specific) example proposals for the use of auction funds, 17 of which it considers “consistent” with ICANN’s mission.
A 19th example, which would see money used to promote TLD diversity and “smells too much like marketing” according to some CCWG members, is still open for debate.
While the list of projects that could be approved for funding under the proposed regime is too long to republish here, it would for example include giving scholarships to pHD students researching internet infrastructure, funding internet security education in developing-world primary schools and internet-related disaster-recovery efforts in risk-prone regions.
The only area the CCWG appears to be reluctant to endorse funding is the case of commercial enterprises run by women and under-represented communities.
The full list can be downloaded here (pdf).
The CCWG hopes to publish its initial report for public comment not too long after ICANN 61 in March. Comment would then need to be incorporated into a final report and then ICANN would have to approve its recommendations and implement a process for actually distributing the funds.
Don’t expect any money to change hands in 2018, in other words.

.music and .gay possible in 2018 after probe finds no impropriety

Five more new gTLDs could see the light of day in 2018 after a probe into ICANN’s handling of “community” applications found no wrongdoing.
The long-running investigation, carried out by FTI Consulting on ICANN’s behalf, found no evidence to support suspicions that ICANN staff had been secretly and inappropriately pulling the strings of Community Priority Evaluations.
CPEs, carried out by the Economist Intelligence Unit, were a way for new gTLD applicants purporting to represent genuine communities to avoid expensive auctions with rival applicants.
Some applicants that failed to meet the stringent “community” criteria imposed by the CPE process appealed their adverse decisions and an Independent Review Process complaint filed by Dot Registry led to ICANN getting crucified for a lack of transparency.
While the IRP panel found some hints that ICANN staff had been nudging EIU’s arm when it came to drafting the CPE decisions, the FTI investigation has found:

there is no evidence that ICANN organization had any undue influence on the CPE Provider with respect to the CPE reports issued by the CPE Provider or engaged in any impropriety in the CPE process.

FTI had access to emails between EIU and ICANN, as well as ICANN internal emails, but it did not have access to EIU internal emails, which EIU declined to provide. It did have access to EIU’s internal documents used to draft the reports, however.
Its report states:

Based on FTI’s review of email communications provided by ICANN organization, FTI found no evidence that ICANN organization had any undue influence on the CPE reports or engaged in any impropriety in the CPE process. FTI found that the vast majority of the emails were administrative in nature and did not concern the substance or the content of the CPE results. Of the small number of emails that did discuss substance, none suggested that ICANN acted improperly in the process.

FTI also looked at whether EIU had applied the CPE rules consistently between applications, and found that it did.
It also dug up all the sources of information EIU used (largely Google searches, Wikipedia, and the web pages of relevant community groups) but did not directly cite in its reports.
In short, the FTI reports very probably give ICANN’s board of directors cover to reopen the remaining affected contention sets — .music, .gay, .hotel, .cpa, and .merck — thereby removing a significant barrier to the gTLDs getting auctioned.
If there were to be no further challenges (which, admittedly, seems unlikely), we could see some or all of these strings being sold off and delegated this year.
The probe also covered the CPEs for .llc, .inc and .llp, but these contention sets were resolved with private auctions last September after applicant Dot Registry apparently decided it couldn’t be bothered pursuing the ICANN process any more.
The FTI’s reports can be downloaded from ICANN.

How Whois could survive new EU privacy law

Reports of the death of Whois may have been greatly exaggerated.
Lawyers for ICANN reckon the current public system “could continue to exist in some form” after new European Union privacy laws kick in next May, according to advice published (hurriedly, judging by the typos towards the end) shortly before Christmas.
Hamilton, the Swedish law firm hired by ICANN to probe the impact of the General Data Protection Regulation, seems to be mellowing on its recommendation that Whois access be permanently “layered” according to who wants to access registration records.
Now, it’s saying that layered Whois access could merely be a “temporary solution” to protect the industry from fines and litigation until ICANN negotiates a permanent peace treaty with EU privacy regulators that would have less impact on current Whois users.
This opinion came in the third of three memorandums from Hamilton, published by ICANN last week. You can read it here (pdf).
With the first two memos strongly hinting that layered access would be the most appropriate way forward, the third points out the huge, possibly insurmountable burden this would place on registrars, registries, law enforcement agencies, the courts, IP lawyers, and others.
It instead suggests that layered access be temporary, with ICANN taking the lead in arranging a longer-term understanding with the EU.
The latest Hamilton memo seems to have taken on board comments from registries and registrars, intellectual property lawyers and domain investors, none of which are particularly enthusiastic about GDPR and the lack of clarity surrounding its impacts.
GDPR is an EU-wide law that gives much stronger protection to the personal data of private citizens.
Companies that process such data are kept on a much tighter leash and could face millions of euros of fines if they use the data for purposes their customers have not consented to or without a good enough reason.
It’s not a specifically intended to regulate Whois — indeed, its conflict with longstanding practice and ICANN rules seems to have been an afterthought — but Whois is the place the domain industry is most likely to find itself breaking the law.
It seems to be generally agreed that the current system of open, public access to all fields in all Whois records in all gTLDs would not be compliant with GDPR without some significant changes.
It also seems to be generally agreed that the data can be hugely useful for purposes such as police investigations, trademark enforcement and the domain secondary market.
The idea that layered access — where different sets of folks get access to different sets of data based on their legitimate needs — might be a solution has therefore gained some support.
Hamilton notes:

Given the limited time remaining until the GDPR enters into effect, we believe that the best chance of continuing to provide the Whois services and still be compliant with the GDPR will be to implement an interim solution based on an layered access model that would ensure continued processing of Whois data for some limited purposes.

The problem with this solution, as Hamilton now notes, is that it could be hugely impractical.

such a model would require the registrars to perform an assessment of interests in accordance with Article 6.1(f) GDPR on an individual case-by-case basis each time a request for access is made. This would put a significant organizational and administrative pressure on the registrars and also require them to obtain and maintain the competence required to make such assessments in order to deliver the requested data in a reasonably timely manner. In our opinion, public access to (limited) Whois data would therefore be of preference and necessary to fulfill the above purposes in a practical and efficient way.

And, Hamilton says, a scenario in which all cops had access to all Whois data would not necessarily be GDPR-compliant. Police may have to right to access the data, but they’d have to request it on a case-by-case basis.
Registrars — or even the courts — would have to make the decision as to whether each request was legit.
It would get even more complex for registrars when the Whois requester was an IP lawyer, as they’d have to check whether it was appropriate to disclose the personal data to both the lawyer and her client, the memo says.
For registrars, the largely nominal cost of providing a Whois service today would suddenly rocket as each Whois lookup would require human intervention.
Having introduced the concept of layered access and then shot it to pieces, Hamilton finally recommends that ICANN start talks with data protection authorities in the EU in order to find a solution where Whois services can continue to be provided in a form available to the general public in the future”.
ICANN should start an “informal dialogue” with the Article 29 Working Party, the EU privacy watchdog made up of data protection authorities from each member state, and initiate formal consultations with one or more of these DPAs individually, the memo recommends.
The WP29 could prove a tough chat, given that the group has a long history of calling for layered access, and its views, even if changed, would not be binding anyway.
So Hamilton says ICANN, in conjunction with its registries and registrars, should carry out a formal data protection impact assessment (DPIA) and submit it to a relevant DPA in a EU country where it has a corporate presence, such as Belgium.
That way, at least ICANN has a chance of retaining Whois in a vaguely recognizable form while protecting the industry from crippling extra costs.
In short, the industry is still going to have to make some changes to Whois in the first half of 2018, some of which may make Whois access troublesome for many current users, but those changes may not last forever.
ICANN CEO Goran Marby said in a blog post:

We’ve made it a high priority to find a path forward to ensure compliance with the GDPR while maintaining WHOIS to the greatest extent possible. Now, it is time to identify potential models that address both GDPR and ICANN compliance obligations.
We’ll need to move quickly, while taking measured steps to develop proposed compliance models. Based on the analysis from Hamilton, it appears likely that we will need to incorporate the advice about using a layered access model as a way forward.

He wants the industry to submit compliance models by January 10 for publication January 15, with ICANN hoping to “settle on a compliance model by the end of January”.

.mail, .home, .corp hopefuls could get exit plan in January

The twenty remaining applicants for the gTLDs .corp, .home and .mail could get the option to bow out with a full refund as early as January.
The ICANN board of directors earlier this month discussed several options for how to treat the in-limbo applications, one of which was a refund.
According to minutes of its December 13 meeting:

Staff outlined some potential options for the Board to consider, which ranged from providing a full refund of the New gTLD Program application fee to the remaining .CORP, .HOME, and .MAIL applicants, to providing priority in subsequent rounds of the New gTLD Program if the applicants were to reapply for the same strings.

Applicants for these strings that already withdrew their applications for a partial refund were also discussed.
The three would-be gTLDs have been frozen for years, after a study showed that they receive vast amounts of error traffic already on a daily basis.
This means there would be likely a large number of name collisions with zones on private networks, should these strings be delegated to the authoritative root.
The ICANN board instructed the staff to draft some resolutions to be voted on at “a subsequent meeting”, suggesting directors are close to reaching a decision.
It seems possible a vote could even happen at a January meeting, given that the board typically meets up almost every month.

ICANN attendance shrinks again

The number of people showing up an ICANN public meeting was down again for ICANN 60.
The organization today reported that 1,929 people showed up in Abu Dhabi, the first time Annual General Meeting attendance has dropped below 2,000 for some time.
At the comparable 2016 AGM, held in Hyderabad, ICANN saw a record 3,182 people check in, a number swollen by many hundreds of Indian delegates.
In 2015, the AGM in Dublin reportedly had 2,395 participants.
The 1,929 going to Abu Dhabi compares to the 2,089 going to the Copenhagen meeting in March and the 1,353 who went to the much shorter, more focused Johannesburg meeting in June.
All three 2017 meetings had lower attendance than their 2016 counterparts.
While there had been some talk of some foreigners, particularly women, avoiding ICANN 60 due to its location, it appears that the gender mix was pretty much the same as usual, with 31% of people saying they were female.
The number of sessions continued to spiral out of control, although they were on average shorter.
There were 407 meetings over the course of the week, up from 381 at the Hyderabad AGM, but the total number of session-hours was down from 814 to 696.
The amount of equipment lugged to the venue weighed in at 9.6 metric tonnes. That’s the same, ICANN said, as 6,517 adult female falcons.
That’s enough birds to fill sixty London buses to the moon and back in a hundred football stadiums THE SIZE OF WALES.
Probably.

Donuts loses Cole to law firm

Donuts vice president Mason Cole has quit to join a law firm.
Cole said on social media yesterday that he has joined Seattle-based Perkins Coie as an “Internet Governance Advisor”.
He said he will continue to participate in ICANN in his new capacity, where Perkins Coie is involved in intellectual property matters.
Cole has been in the industry for over 15 years, first at SnapNames and Oversee.net before becoming a founding employee of new gTLD registry player Donuts.
He was most recently VP communications and industry relations there.
He’s not a lawyer, but he does have extensive experience on the Generic Names Supporting Organization, including being its first liaison to the Governmental Advisory Committee.

ICANNWiki could be first victim of budget cutbacks

ICANN is mulling whether to cut funding to ICANNWiki, the independent community encyclopedia, as part of its efforts to rein in spending.
There’s $100,000 at stake, more than half of the Oregon-based non-profit’s annual budget.
Ray King, the gTLD registry CEO who founded ICANNWiki in 2005, told DI today that ICANN has been providing funding for the last three years.
“While no decision has been made yet, there is a possibility that ICANN will not continue it,” he said in an email.
“We’ve poured our hearts and minds into this project for many years so this would be disappointing to say the least,” he said. “We believe in our mission and that it is in the community’s interest for this support to continue”.
An ICANN spokesperson said: “At this time, while it is highly unlikely that ICANN will be renewing its contract with ICANNWiki, we have not come to a final determination.”
ICANNWiki currently carries about 6,000 volunteer-edited articles covering many aspects of the ICANN community and the domain name industry in general.
It’s perhaps most recognizable for the frequently shared caricatures of community members it produces, such as this handsome devil, and the playing card decks handed out as freebies at ICANN meetings.
According to a letter (pdf) sent to ICANN earlier this month, ICANNWiki receives cash contributions of $161,000 a year, $61,000 of which comes from 10 corporate sponsors.
ICANNWiki estimates the 2,200 hours per year of volunteer work it benefits from is worth about $66,500. It says it has in-kind contributions worth about $40,000 from other companies.
It puts the value of its “reference services” at $339,959 a year.
That’s based on estimated visits to its site of 182,774 in 2017 (not including visits from its editors and staff) and a value per visit of $1.86 (based on an unrelated ROI calculation Texas Public Libraries used to justify its own existence earlier this year).
The ICANN $100,000 contribution is at risk now due to the organization’s plan to cut back on spending in the face of revenues that are coming in lower than expected due to a weak domain name market.
CEO Goran Marby said yesterday that its fiscal 2018 is currently running a million dollars short. Coupled with a perceived need to add an extra $80 million to its reserve budget, ICANN is looking for areas to cut costs.
ICANNWiki funding may be the low-hanging fruit in this endeavor; while it’s no doubt valuable (I probably use it two or three times per week on average), it’s perhaps not straightforward to quantify that value.
Even if the funding is cut, I would not expect ICANNWiki the web site to disappear, given the level of corporate sponsorship and in-kind services it receives and the low overheads suggested by its modest traffic numbers, but perhaps its growth and outreach ambitions would be curtailed.
UPDATE: This post was updated at 2307 UTC with a quote from ICANN.

ICANN, with $143 million budget, running out of cash

ICANN is to tighten its belt over the coming year as lower than expected revenue from domain name registrations has caused a budget shortfall and dwindling reserves.
The organization is $1 million short so far in its fiscal 2018, which CEO Goran Marby says is forcing him to look at making cuts to staffing costs, travel expenses, and community-requested projects.
Meanwhile, chair Cherine Chalaby says the board of directors is worried that ICANN’s reserve fund is $80 million shy of where it ideally should be.
Both men outlined their priorities in separate end-of-year blog posts this week.
It does not yet appear that anyone’s job is on the line.
Marby indicated that headcount would be reduced through attrition — sometimes not replacing staff who leave — rather than lay-offs.
“The reality is, ICANN has a significant budget but not an infinite budget. We need to make some changes, and can’t do everything we are asked,” he wrote, before explaining some areas where “efficiencies” could be found.

For example, when someone leaves ICANN org, we are taking a close look at the vacancy, the team’s needs and other people’s availability and skills before deciding if we are going to fill the role. We are also looking at our staff travel practices for ICANN meetings and other ICANN org commitments, reviewing our language services support levels and offering, and trying to consolidate our collateral and the volume of reports. We are looking at what projects we could delay or stop

Some might say that this renewed focus on how ICANN manages its money is overdue. The organization has bloated fast over the last several years, as over 1,200 new gTLD registries became contracted parties and interest in ICANN’s work grew globally.
In its financial year ending June 2012, it budgeted for revenue of $69.7 million and expenses of $67 million.
For FY2017, which ended this June, it was up to revenue of $132.4 million and expenses of $126.5 million.
Over the same period, headcount swelled from 158 full-time equivalents to 365. That was anticipated to grow to 413 by next June.
For the financial year ending next June, ICANN had budgeted for $142.8 million revenue, growing from $135.9 million, but Marby said in his blog post today that it might actually be flat instead.
As much as 64% of ICANN’s revenue is driven by transaction volumes — registrations, renewals and transfers — in gTLDs. In the quarter to September, revenue was $1 million behind plan due to lower than expected transactions, Marby said.
The message is to expect cuts, possibly to projects you care about.
Adding complexity, the ICANN board has decided following public consultation at 12 months funding is the appropriate amount ICANN should be keeping in reserve — so it can continue to function for a year should its contracted parties all abruptly decide not to pay their dues.
Unfortunately, as Chalaby outlined in his post today, this reserve pool is currently at about $60 million — just five months’ worth — so the organization is going to have to figure out how to replenish it.
Building up reserves to the tune of an extra $80 million is likely to put more pressure on the regular annual budget, leeching cash from other projects.
Chalaby said that the board will discuss its options at its February 2018 workshop.
Marby, meanwhile, said that a new budget will be out for public comment in mid-January.

New Trump appointee slams ICANN after security group shutdown

Not even a month into the job, the US official with most direct responsibility over domain name policy has criticized ICANN for shutting down a security working group.
David Redl, the new assistant secretary at the National Telecommunications and Information Administration, wrote to ICANN (pdf) last week to complain about its board unilaterally shutting down, temporarily, its supposedly independent Security, Stability and Resiliency of the DNS Review team.
He wrote that the action “calls into question” ICANN’s commitment to transparency and accountability, writing:

Everything documented to date about these reviews stresses the importance of openness, transparency and community consultation. Unfortunately, it seems that with the October 28th action, the ICANN Board violated these principles by substituting its judgement for that of the community.

SSR-2, as it is known, is one of the reviews previously mandated by ICANN’s Affirmation of Commitments with the US government (via the NTIA) but which can now be found instead embedded in its bylaws.
The ICANN board of directors temporarily suspended it in October, something like a soft reboot, after growing concerned that it was stepping outside of its mandate and that its members lacked expertise.
The move attracted broad criticism and it would be disingenuous of me to suggest that Redl’s position is a controversial one — you’d be hard pressed to find any section of the community that wholeheartedly supports the board’s action.
Indeed, the US representative to the Governmental Advisory Committee voiced similar concerns at the ICANN meeting in Abu Dhabi in late October, prior to Redl’s confirmation to the NTIA job.
Redl took the post November 21, having been nominated by Donald Trump back in May, replacing Obama appointee Larry Strickling, who left the agency in January.
He’s the first NTIA chief since ICANN’s inception not to enjoy the special position of power over ICANN granted by the old IANA contract, which was scrapped in September 2016.