.transformers gTLD bid transforms into pile of burnt cash

Toy-maker Hasbro has withdrawn its application for the .transformers new gTLD.
It was Hasbro’s only application, and it’s the first example of an applicant that paid to participate in ICANN’s new gTLD prioritization draw last December subsequently withdrawing its bid.
One of the longer and more eyebrow-raising applied-for strings, .transformers brings the number of withdrawn applications to 18, most of which were dot-brands. Now, 1,912 bids remain.
The bid had a prioritization number of 131, putting it toward the very top of the queue of non-IDN applications.
If many more applications with high prioritization numbers withdraw, it would raise serious questions about the validity of the argument that participating in the draw indicates a non-defensive bid.
Hasbro’s application suggested that it was filed mainly defensively, it’s “Mission/Purpose” stated as primarily: “To secure and protect the Applicant’s key brand (“TRANSFORMERS”) as a gTLD”.
Maybe it was worried that an electrical parts manufacturer might go for the same string?
It’s the sixth application to be withdrawn in a week, following General Motors’ pulling of its .gmc, .cadillac and .chevrolet bids and Hartford Fire Insurance’s withdrawal of .thehartford.
UPDATE (February 20): ICANN tells me that there are currently only three more new gTLD applications in its withdrawal pipeline.

PIR starts pre-registration for .ngo domain names

Public Interest Registry has become the first major gTLD registry to start taking pre-registrations for a not-yet-approved gTLD.
PIR said today that it’s allowing non-governmental organizations to register an “expression of interest” for .ngo and .ong domains.
Pre-registrations are of course free and non-binding. They’re mainly a way to opening the marketing communications channel with customers well in advance of the launch of a TLD.
PIR does not expect to launch .ngo or .ong until 2014. Its ICANN evaluation priority numbers for the two TLDs are 810 and 958, in the first half of the list.
Pre-registration is not a new concept, of course, but it’s one generally embraced more often by registrars (eNom and United Domains are the two most prominent examples) rather than incumbent registries.
For PIR to start engaging directly with potential registrants is one of the first signs that, in the wake of ICANN’s lifting of the ban on vertical integration between registries and registrars, the new gTLD market won’t be playing by the old rules.

Pile up! GM cancels two more new gTLD bids

Is General Motors bowing out of ICANN’s new gTLD program completely? It’s certainly looking that way, following the withdrawal of two more of its five original applications.
ICANN updated its site yesterday to reflect that GM has yanked its bids for .chevrolet and .cadillac, two of its proposed automotive dot-brands.
It comes just a few days after its .gmc application was pulled, and suggests that its remaining applications — for .buick and .chevy — may also be withdrawn in the near future.
The total number of gTLD applications withdrawn is now up to 17, a dozen of which are dot-brands, from an original list of 1,930.
We may be seeing more in the near future. Applications withdrawn before ICANN publishes Initial Evaluation results — expected to start March 23 — qualify for a refund of 70%, or $130,000. After that, the refund halves.
The final number of withdrawn applications will be telling, and likely to inform future new gTLD application rounds.
If it turns out a large number of companies applied for dot-brands purely defensively (I wouldn’t consider 12 to 17 withdrawals a large number) then ICANN may have to rethink how the program is structured.

Two more dot-brand gTLD bids withdrawn

Two applications for “dot-brand” new gTLDs were pulled last week.
General Motors has withdrawn its bid for .gmc and Hartford Fire Insurance Company dropped .thehartford.
Both bids had been assigned priority numbers in ICANN’s prioritization draw last December, but neither applicant had purchased tickets, suggesting a lack of interest in operating the TLDs.
The withdrawal of .gmc at this time, less than two weeks before the publication by ICANN of string similarity evaluation results, is particularly interesting, and a little strategically puzzling.
There’s an active application by GMO Internet for .gmo, which could conceivably be ruled confusingly visually similar to .gmc.
By pulling out now, GM has lost its right to file a string similar challenge at a later date, and may have lost its ability to win .gmc in all future application rounds too (if .gmo is approved this time around, GMO could claim confusing similarity against future .gmc bids).
But GM still has active bids for the much more meaningful .chevrolet, .buick, .chevy and .cadillac, all of which also have prioritization numbers suggesting GM mainly applied defensively.
Hartford’s .thehartford was its only application.
The two withdrawals bring the total to date to 15, at least 10 of which were dot-brands. There are now 1,915 applications still in play.
The new gTLD consultants involved in the withdrawn bids — which one assumes were mostly filed defensively based on advice received — are a fairly mixed bunch so far.

Governments to reveal new gTLD objection shortlist next week

ICANN’s Governmental Advisory Committee will next week reveal its shortlist of new gTLD applications that face possible death-by-government.
A brief notice posted to the GAC web site yesterday said:

During the week of February 18th, 2013, the GAC will post its list of applications for consideration by the GAC as a whole in Beijing, in the context of developing GAC advice as outlined in the Applicant Guidebook (Module 3 section 3.1).

This appears to mean that the GAC has been doing a lot of preparatory work to get the list of 1,916 remaining new gTLD applications down to a more manageable number.
ICANN is expecting to receive GAC Advice on New gTLDs, as defined in the Applicant Guidebook, not too long after its Beijing public meeting closes on April 11.
As reported earlier today, ICANN expects to start approving new gTLDs April 23. It’s not going to do this before it’s received the GAC’s go-ahead.
GAC Advice could take the form of a consensus recommendation to ICANN to kill off one or more new gTLD bids, or non-consensus “concerns” that would be less deadly to applicants.
GAC members have already issued 242 Early Warnings, which were designed to give applicants the opportunity to change their plans or withdraw before receiving full GAC Advice.
No doubt some of the companies in receipt of Early Warnings will have done enough in the interim to put governments’ minds at rest, but there’s also nothing stopping the GAC adding new applications to its hit-list.
The European Commission and Iran both submitted lists of concerns outside of the official Early Warning process, and there’s been no official word from the GAC yet as to what status they have.
With that in mind, it’s difficult to predict how many applications, and which ones, are going to be on the GAC’s new shortlist.

Chehade names the date: ICANN to approve first new gTLDs on April 23

ICANN expects to approve the first new gTLDs on April 23, just 68 days from now.
The long-awaited date, which of course comes with certain caveats, was revealed by CEO Fadi Chehade in a video interview with ICANN media affairs chief Brad White today.
Chehade said:

We are now targeting to be able to recommend for delegation the first new gTLD as early as the 23rd of April, and I can say this because we have made great progress in the last few weeks in aligning all the necessary pieces that would permit us to recommend a delegation as early as the 23rd of April.
Having said that, I want to be very clear there are some things that we can’t control that may cause this date to slip, but even in that case we are looking for a slippage of days or weeks, not months anymore. So we are definitely now with clear visibility on a set of processes that allow us to hit the first recommended delegation as early as the 23rd of April.

The news is surprising; those following the new gTLD program closely are more accustomed to hearing announcements about delays.
Chehade’s recent comments at a meeting of registries and registrars in Amsterdam, in which he said his personal preference would be to delay the whole new gTLD program by a year, did not suggest the imminent announcement of so ambitious a deadline.
He addresses those comments in the interview.
The news strongly suggests that ICANN’s Governmental Advisory Committee — arguably the biggest unknown quantity at this point in the process — is on target to submit its formal Advice on New gTLDs not too long after the ICANN public meeting in Beijing, which ends April 11.
I would have put money on that not happening.
The date also suggests that ICANN is unlikely to extend the window for filing objections against applications, currently closing March 13, despite the very tight deadline this will create for potential objectors.
Because the results of the String Similarity Panel’s deliberations — which will very likely create new contention sets — will not be published until March 1, many organizations will only get seven or eight working days to finalize and submit their strategic objections.

Mystery gTLD applicant to take Google fight to lawmakers

An as-yet unidentified new gTLD applicant plans to lobby Washington DC and Brussels hard to get dozens of Google’s new gTLD bids thrown out of ICANN on competition grounds.
Phil Corwin of the law firm Virtuallaw, who is representing this applicant, told DI yesterday that his client believes Google plans to use new gTLDs to choke off competition in the web search market.
“They’re trying to use the TLD program to enhance their own dominance and exclude potential competitors,” Corwin said. “We think this should be looked at now because once these TLDs are delegated the delegations are basically forever.”
He’s planning to take these concerns to “policy makers and regulators” in the US and Europe, in a concerted campaign likely to kick off towards the end of the month (his client’s identity will be revealed at that time, he assured us).
Corwin’s client — which is in at least one contention set with Google, though in none with Amazon — reckons ICANN’s new gTLD program is ill-suited to pick the best candidate to run a gTLD.
If objections to new gTLD applications fail, the last-resort method for deciding the winner of a contention set is auction. Google obviously has the resources to win any auction it finds itself in.
“On any TLD Google has applied for, nobody can beat them,” said Corwin. “They have $50bn cash, plus the value of their stock. If they want any of the TLDs they’ve applied for, they get them.”
“A string contention process that relies solely on an auction clearly favors the deep-pocketed,” he said.
Google applied for 101 new gTLDs, 98 of which remain in play today. A small handful of the strings are dot-brands (such as .youtube and .google), with the majority comprising dictionary words and abbreviations.
Some of its generic bids propose open business models, while others would have “closed” or single-registrant business models. As we reported on Friday, this has kicked off a firestorm in the ICANN community.
Corwin said that Google appears to be planning to close off not only individual TLDs, but entire categories of TLDs.
For example, Google has applied for .youtube as a brand, but it’s also applied for .film, .movie, .mov, .live, .show and .tube with a variety of proposed business models.
“You can pretty well bet that they’ll exclude those that will pose a competitive threat to YouTube,” Corwin said.
Search will become much more important after the launch of hundreds of new gTLDs, Corwin reckons, as consumers are “not going to know that most of them exist”.
“Generic words are the perfect platform for constructing vertical search engines that can compete against Google’s general search engine,” Corwin said.
“Google is trying to buy up not just one but multiple terms that cover the same goods and services in key areas of internet commerce, and in effect control them so competition cannot arise and challenge Google’s dominance as a search engine,” he said.
Google has not yet revealed in any meaningful way how its search engine will handle new gTLDs.
The US Federal Trade Commission, at the conclusion of an antitrust investigation, recently gave Google a pass for its practice of prominently displaying results from its own services on results pages.
With that in mind, if Google were to win its contention set for .movie, but not for .film, is it possible that .movie would get a competitive advantage from preferential treatment in search?
Corwin reckons that Google anti-competitive intentions are already suggested by its strategy in ICANN’s new gTLD prioritization draw, which took place in December.
Of the roughly 150 applications for which Draw tickets were not purchased, Google is behind 24 of them — including .movie, .music, .tube and .search — 22 of which are in contention sets.
As a result, these contention sets have all been shunted to the back of ICANN’s application processing queue, adding many months to time-to-market and costing rival, less-well-funded applicants a lot of money in ongoing overheads.
“We see Google playing a rather different game here to most other applicants in terms of their motivation, which is not to enter the market but to protect their market dominance,” Corwin said.
Corwin said the game plan is to taken all these concerns to policy makers and regulators in the US and Europe in order to get governments on-side, both inside and outside of the ICANN process.
Corwin is also counsel and front-man for domainer group the Internet Commerce Association, but he said that the new anti-Google drive is unrelated to his work for ICA.
So why is his client only bringing up the issue now? After all, we’ve all known about the contents of every new gTLD application since last June.
My hunch is that Google is playing hard-ball behind the scenes in settlement talks with contention set rivals.
Contention sets can be resolved only when all but one of the applicants drops out, either following an ICANN auction or private buy-outs. Most applicants favor private resolution because it offers them the chance to recoup some, all, or more than the money they splashed out on applying.
That game plan probably does not apply to Google, of course, which is not wanting of funds. The company may even have good reason to prefer ICANN auctions, in order to to discourage those who would apply for new gTLDs in future just in order to put their hands in Google’s pockets.
The topic of closed generics and competition is likely to be a hot-button topic at ICANN’s next public meeting, coming up in Beijing this April.
Members of ICANN’s Governmental Advisory Committee have already expressed some concerns about many “closed gTLD” applications made by Google, Amazon and others.
ICANN’s board of directors is currently mulling over what to do about the issue, and has thrown it open to public comment for your feedback.

ICANN seeks more power over new gTLD registries

When ICANN published a new draft of its basic Registry Agreement for wannabe new gTLD operators last week, much of the focus was on the new Public Interest Commitments mechanism, but a whole bunch of other big changes were also proposed.
ICANN has floated some quite significant amendments that would give it greater powers to approve mergers and acquisitions and more or less unilaterally change registries’ contracts in future.
Here’s my take on the biggest changes.
Regulating M&A activity
When a new gTLD registry business is acquired, ICANN wants to have greater rights to approve the transaction.
Changes to Section 7.5 would enable ICANN to check that the buyer and its ultimate parent company “meets the ICANN-adopted specification or policy on registry operator criteria then in effect”.
That would specifically include fresh background checks on the acquirer and its parent company.
For new gTLD applicants planning to flip their gTLDs in future, it means the buyers would be subject to the same scrutiny as the applicants themselves are today.
But — and it could turn out to be a big but — these checks would not be carried out if the registry’s buyer was already itself a compliant, ICANN-contracted gTLD registry.
In other words, it is going to be much easier for gTLD registries to acquire each other than it will be for outsiders to acquire them.
Had the rules been in place before now they would have complicated, for example, the acquisition of .pro by Hostway (not already a registry), but not its subsequent acquisition by Afilias (which already had .info).
Powers to change the contract
ICANN wants to grant itself the ability to make “Special Amendments” to all gTLD registry agreements in future without the consent of the registries.
Under the current version of the Registry Agreement, such amendments would need the approval of registries representing two-thirds of all registry fees paid to ICANN before they became law.
(It’s possible that this would give Verisign, as .com/.net registry, a de facto veto due to its market share).
But ICANN wants to change this rule to give its own board of directors the ability to impose amendments to the contract on registries, even if the registries vote against them.
The board would need a supermajority vote (66%, which pretty much every board vote receives anyway) and would need to be “justified by a substantial and compelling need”, quite a subjective threshold, in order to ignore the registries’ protests.
Special Amendments could not cover basic things like pricing or the definition of “registry services”.
ICANN, no doubt bruised by 18 months of laborious Registrar Accreditation Agreement renegotiations, says the change is “of fundamental importance and deserves careful attention given the long-term nature of registry agreements”.
But ICANN contracted parties are usually pretty reluctant to give ICANN more powers over their businesses, especially when it comes to sacrificing their right to renegotiate their contracts, so I can’t see these proposed changes to the Registry Agreement being accepted without hot debate.
Reserved Names
Section 2 of the agreement has been tweaked to make it a bit clearer under what circumstances registries are able to register names for their own use, or block them, and when they have to pay ICANN fees to do so.
The new language makes it clear that registries will not have to pay ICANN fees, and won’t have to use accredited registrars, for domains that are completely blocked from registration and are not used by the registry or anyone else.
By my reading, this could cover the kind of defensive blocking services that many applicants plan to offer to trademark owners, and other anti-abuse mechanisms, but not domains that registries plans to “reserve” for their own use.
At first glance, this might be seen as something that primarily affects dot-brands (which own all the second-level domains in their gTLDs) but most will probably be protected by the 50,000-domain threshold that must be passed before per-domain ICANN fees kick in.
Names that are held back for the registry to use would still have to be registered through a registrar and would incur ICANN fees, with a handful of named exceptions (nic.tld, www.tld, etc).
The new Registry Agreement also includes the final list of strings related to the Red Cross and International Olympic Committee that need to be reserved at the second level, along with a placeholder for reservations of strings related to other intergovernmental organizations.
Other stuff
There are quite a lot of proposed changes (pdf) to the agreement, which are currently open for public comment, and it’s possible I may have missed something equally important as the above.
I’m wondering, for example, about the possible impact of the changes to Specification 7 that seem to make registries responsible if their registrars do not uphold intellectual property rights protection mechanisms.
Also, do the changes to Spec 4 suggest that ICANN plans to outsource the job of Centralized Zone Data Access Provider? What’s the impact on applicants of the changes to Continuing Operations Instrument?
What have you spotted?

ICANN terminates three registrars

ICANN has pulled the plug on three accredited domain name registrars, saying they all failed to comply with an audit.
Lime Labs, R Lee Chambers Company (DomainsToBeSeen.com) and Central Registrar (Domainmonger.com) have been given 30 days notice that their accreditations are being yanked and that their domains will be transferred to other registrars.
About 12,000 domains will be affected, the vast majority of which are managed by Lime Labs.
The three registrars were among 10 that ICANN pounced on last month when they failed to respond to its Contractual Compliance Audit Program.
This program is a three-year initiative to make sure registrars and registries are complying with their contractual requirements. A third of registrars were randomly selected to take part late last year.
According to ICANN’s termination notices, all three registrars ignored last month’s warnings and did not submit the data required for the audit.
DomainsToBeSeen and Domainmonger both have just a few hundred gTLD domain names under management each. Lime Labs is much larger, with over 11,000.
The terminations will come into affect March 13.

Closed gTLD debate threatens Google and Amazon

Howls of criticism about Google, Amazon and others’ plans to grab huge swathes of new gTLD real estate and keep it to themselves seem to have spurred ICANN into action.
A public comment period opened this week seeks community feedback (indirectly) on applications such as Amazon’s .music, L’Oreal’s .beauty and Google’s .blog, among many others.
These gTLDs have all been proposed with “single-registrant” business models, in which the registry controls all second-level domains and regular registrars cannot sell them to anyone else.
It’s the “dot-brand” model, but applied to generic dictionary words for which the applicants have no trademark rights.
Scores of such applications have been made, notably by Google and Amazon, but they have drawn criticism from many in the ICANN community, such as a small group of registrars and others led by Blacknight Solutions.
Members of the Governmental Advisory Committee, most vocally Australia, have also expressed serious concerns about the model, saying it could be anti-competitive.
ICANN’s board of directors is currently mulling over these complaints, and has thrown the issue open to public comment to aid in its deliberations.
What it wants from you is:

proposed objective criteria for:

• classifying certain applications as “closed generic” TLDs, i.e., how to determine whether a string is generic, and
• determining the circumstances under which a particular TLD operator should be permitted to adopt “open” or “closed” registration policies.

The way the public comment request is phrased should be quite worrying to applicants for closed generic gTLDs.
It seem to assume that ICANN should be classifying gTLDs, something it has steadfastly refused to do for all of the years these kinds of debates have been raging.
What is a “closed generic” anyway?
The DI PRO New gTLD Application Tracker classifies gTLD applications into three buckets: Open, Restricted and Single-Registrant.
We made no attempt to segregate dot-brands from other Single Registrant bids, precisely because there’s currently no such thing as a dot-brand under ICANN’s rules.
There doesn’t seem to be much community concern about the apps we have classified as “Restricted” — applications for .lawyer that propose to vet registrants for their lawyerly credentials, for example.
The concern is all directed at Single Registrant bids. We have 912 of these in our database.
Many of these are dot-brands, where the applied-for string is an exact match with a famous trademark, but many are for dictionary words for which the applicant has no preexisting rights.
In order to sanely operate a dot-brand, applicants must request an exemption to the ICANN rules that oblige them to offer their gTLDs via accredited registrars on a non-discriminatory basis.
This Code of Conduct is a part of the base Registry Agreement for new gTLDs, but it contains a carve-out for single-registrant applicants:

Registry Operator may request an exemption to this Code of Conduct, and such exemption may be granted by ICANN in ICANN’s reasonable discretion, if Registry Operator demonstrates to ICANN’s reasonable satisfaction that (i) all domain name registrations in the TLD are registered to, and maintained by, Registry Operator for its own exclusive use, (ii) Registry Operator does not sell, distribute or transfer control or use of any registrations in the TLD to any third party that is not an Affiliate of Registry Operator, and (iii) application of this Code of Conduct to the TLD is not necessary to protect the public interest.

This provision was added specifically in order to enable “dot-brands” to exist.
It would be pretty weird if, for example, L’Oreal was forced to make .loreal domains available via hundreds of registrars. By requesting an exception, L’Oreal has the chance to keep .loreal in-house.
However, because ICANN deliberately has made no distinction between commonly used words and brands (.amazon could be both), L’Oreal was also able to apply for .beauty as a single-registrant gTLD.
It’s not really a loophole — the possibility of companies applying for closed generics was envisaged by ICANN and the policy-making community long before the application window even opened.
Make no mistake, this is well-trodden ground. ICANN had plenty of opportunities to address the issue before the new gTLD application window opened a year ago and it quite consciously decided not to.
The feeling over the last couple of years has been that objection mechanisms such as the Community Objection, as well as GAC Advice, would be sufficient to close down these problematic gTLDs bids.
During the year-long community discussion about registry-registrar vertical integration, the possibility of closed generics was acknowledged and heavily debated.
The GNSO’s Vertical Integration Working Group failed to reach consensus on almost everything, but most of the recommendations emerging from it included some Code of Conduct exemptions for dot-brands.
Some in the WG suggested that the exemptions should only apply to true dot-brands (ie, those back up by a trademark) but ICANN decided against referring to trademarks when it wrote the Code of Conduct due to the very real possibility that it would encourage gaming by speculators.
That problem has not disappeared. While there’s no such gaming in the current batch of applications, there will be second and third and fourth application rounds that the rules being hastily debated at the last minute right now will also (presumably) apply to.
What do closed generic applicants want?
Some ICANN community members assumed that it would be the big domainer-backed companies (later emerging as Donuts, Uniregistry et al) that would attempt these kinds of land-grabs.
But that (so far) hasn’t turned out to be the case. The domainers have generally proposed registration policies that are super, super liberal in comparison to Google, Amazon and other closed-generic applicants.
I believe it’s partly because it’s these massively powerful e-commerce companies that are the ones making the land-grabs, and the scale of the grabs, that the issue of closed generics has reemerged now.
There are two broad use cases of concern here.
First, the .beauty scenario: L’Oreal keeps all the second-level .beauty domains to itself, essentially converting the word “beauty” into a brand name as far as the DNS is concerned.
Second, the .blog scenario: Google implements a policy that all .blog domains must use its Blogger service, potentially to the detriment of competitors such as WordPress or Tumblr.
In both scenarios, the bids could be rejected in their entirety as a result of formal objections, ICANN board action or Governmental Advisory Committee advice.
If the applications were approved, ICANN could also subjectively apply the ill-defined “public interest” test outlined above to force compliance with the Code of Conduct.
But that would merely lead to the bizarre scenario where 1,700 accredited registrars all qualify to sell .music domain names, but the only potential customer is Amazon.com’s intellectual property management department (which wants to run .music as a single-registrant gTLD).
As ICANN points out in its public comments request, the Code of Conduct regulates who can sell domain names in new gTLDs, not who they can sell them to.
The .blog scenario is a little different.
This is what Google, which has applied via its Charleston Road Registry subsidiary, has proposed (with my emphasis):

Should ICANN grant Charleston Road Registry’s exemption to the Code of Conduct, and the proposed gTLD operate with Google as the sole registrar and registrant, members of the public will not be able to directly register domain names in this new gTLD. Users will, however, be given the opportunity to make use of a vanity second-level domain as a memorable identifier linked to content in Blogger.

In other words, Google will “own” all the second-level .blog domains, but will allow Blogger customers to “use” them.
It looks like what it is: a transparently bogus attempted workaround of the Code of Conduct, designed to let Google exclude rival blogging services and independent, self-managed bloggers from .blog.
(Disclosure: DI is an independent, self-managed blog.)
However, I can’t see how what Google has proposed could possibly qualify for an exemption, which is only supposed to be granted provided the registry does not “transfer control or use of any registrations in the TLD to any third party”.
If sanity prevails, Google probably won’t qualify for an exemption.
But that won’t stop it tying .blog to Blogger.
The Code of Conduct, remember, is only concerned with equal, non-discriminatory access for accredited registrars. It does not speak to registry services or registry policies.
Google could possibly still have a registry policy stating that all .blog domains must point to Blogger.
In addition, Google could make the registration fee $0, making it unattractive for most registrars to carry (though I guess registrars could use it as a loss-leader, they wouldn’t be able to up-sell hosting and other services if all .blog domains have to use Blogger).
In conclusion
Applicants for closed generics paid millions of dollars to apply, using the rules set down in the Applicant Guidebook at the time, and I can’t see them being too happy about this eleventh hour surprise.
However, there can be little doubt that ICANN, if its role is to protect the public interest and consumer trust, has to seriously tackle the issue of closed generics.
But it has to address it in 2011.