Verisign steps up anti-gTLD campaign with attack on ICANN’s war chest

Verisign wants ICANN to publish a list of all the reasons it might be sued over the new gTLD program, claiming security and stability risks might be one of them.
In the latest salvo fired in its war against new gTLDs, the company now suggests that the $115 million “risk fund” surplus that ICANN has accumulated is for fending off lawsuits when it breaks the internet.
In a letter (pdf) sent Friday, Verisign asks ICANN to justify the existence of this war chest in light of the fact that it has managed to secure legal indemnities from pretty much everyone involved in the program.
It attempts to link the risk fund to the possible security risks of introducing new gTLDs to the internet, which Verisign has been haranguing ICANN about for the last few months.
“We believe ICANN should be forthcoming about the risks it is shifting and the need for the substantial risk reserve fund, in particular,” the letter, signed by general counsel Richard Goshorn, says.
It’s been well known for a few years that $60,000 of each $185,000 new gTLD application fee was to be allocated to a risk fund created to cover unexpected extra program costs.
The reserve was designed to cover things like underestimating the costs or time needed to evaluate applications, but also, crucially, the lawsuits that ICANN expected but has not yet received.
The cash pile is often to referred to, usually with black humor, as the “legal defense fund”.
Now Verisign seems to be saying that the legal risks are not limited to trademark disputes or the usual antitrust nonsense, but to the security risks ICANN is “transferring” to others.
As we’ve been reporting for the last few months, Verisign has suddenly decided that new gTLDs pose a risk to the internet, largely due to the potential for clashes between newly delegated strings and the unnofficial domains that many organizations already use on their intranets.
For a great discussion on the merits of this argument check out this DI article and comment thread.
With the latest letter, Verisign suggests that ICANN knows it might be sued for messing up corporate intranets, but is keeping that fact quiet.
Referring to a report it issued in March, when its security concerns first emerged, it says:

We believe that ICANN may have established and be maintaining the Risk Reserve in such a high amount in anticipation of significant claims relating to one or more risks identified in the Verisign Report.

If ICANN does get sued on these grounds, the defense cost will effectively have been covered by new gTLD applicants (and therefore their customers, assuming the costs are passed on), Verisign says.
It’s therefore asking for ICANN to disclose the reasons why its risk fund is so big, “in particular, the details regarding what ‘possible litigation’ factored into ICANN’s decisions”.
In other words, Verisign is asking ICANN to publish a list of reasons people might sue it, something I can’t imagine its general counsel agreeing to any time soon.
Is this an effort to shame ICANN into taking its security concerns more seriously, or just more FUD designed to disrupt the new gTLD program and protect its .com dominance?
Opinions, no doubt, will be split.

Are some new gTLD evaluations getting screwed up?

At least two new gTLD applicants reckon ICANN has screwed up their Initial Evaluation, flunking their applications due to missing or mishandled communications.
Following Friday’s batch of IE results, which saw four failures, one angry applicant got in touch with DI to complain about discrepancies in how his bids were scored.
Dot Registry has applied for five “corporate identifier” strings — .inc, .corp, .ltd, .llc and .llp — and has made decent progress convincing the powers that be that they will be operated responsibly.
On Friday, its .inc bid passed its Initial Evaluation with flying colors while .llc and .ltd were marked as “Eligible For Extended Evaluation”, a polite code phrase for #fail.
Both of the unsuccessful bids scored 0 on question 50, “Funding Critical Registry Functions”, which is an automatic failure no matter what the overall score on the financial evaluation.
Applicants are scored on question 50 from 0 to 3 by showing that they have a “Continuing Operations Instrument” to cover three years of operations in the event that their registry fails.
Most applicants have been submitting letters of credit supplied by their bank, which promise to pay ICANN these emergency funds should the need arise.
A zero score indicates basically that no COI was provided.
But CEO Shaul Jolles claims that Dot Registry submitted a single letter of credit to cover all five applications, later amended at ICANN’s request so that each string in the portfolio was broken out individually.
“We then received a note that they now have whatever they needed and it’s resolved,” he said.
He noted that .inc, which passed on Friday with maximum score of 3, is covered by exactly the same LOC as the two applications that scored a 0, which doesn’t make much sense.
A second applicant, which does not currently wish to be named, has told DI that it failed its financial evaluation on a question for which it received no Clarifying Questions.
CQs are the handy method by which ICANN gave applicants a second shot at getting their applications right. Hundreds have been issued, the vast majority related to financial questions.
The common complaint to both failing applicants is that at no point did ICANN inform the applicant that its application was deficient.
We understand both applicants are currently in touch with ICANN management in order to try to get their predicaments resolved.

Four failures and 92 passes in latest new gTLD results

ICANN has just released 96 new Initial Evaluation results, a batch which doubles the number of failures the first phase of the new gTLD program has produced.
The following applications failed to receive passing scores and are now “Eligible for Extended Evaluation”:

• .locus — a strange and ambitious-sounding single-registrant bid filed by Locus Analytics. The company scored 6 out of the necessary 8 points on its financial evaluation with zero scores on the Financial Statements and Funding Critical Registry Functions questions.
• .llc — This is the bid filed by Dot Registry, the company that seems to have a degree of governmental support for its portfolio of corporate identifier bids. It scored a 0 on its Funding Critical Registry Functions question.
• .ltd — Another Dot Registry bid. Failed for the same reason.
• .life — A values-oriented open gTLD application filed by Canadian company CompassRose.Life. Scored a zero on its Financial Statements.

ICANN said last week that it was changing the way it scored the “Funding Critical Registry Functions” question, due to the problems many applicants have been having with Continuing Operations Instruments.
That change only seemed to hit applications with scores of 1, however, so it does not appear to apply in the cases of today’s failed bids.
Applications for the following strings received passing scores.

.legal .sbi .inc .americanfamily .lacaixa .voting .realestate .rest .pfizer .macys .gift .hangout .clinic .blockbuster .lixil .cbre .blog .new .fund .prudential .tab .anquan .group .sale .gay .art .sandvik .security .now .social .shoes .qpon .sohu .fedex .storage .caseih .blog .online .cricket .gal .vip .app .moe .buzz .show .promo .music .cbn .dhl .attorney .sports .legal .football .acer .direct .open .dds .capetown .app .furniture .telefonica .eus .calvinklein .toys .eat .book .axis .casino .ren .crs .baby .ladbrokes .show .call .tech .solar .sanofi .toyota .ubank .canalplus .lexus .immo .moto .hyundai .green .ismaili .health .trading .marketing .llc .xihuan .gratis

We’re now up to 720 passes and 8 failures in the program, with 1,124 results still to be announced.

Get live new gTLD program stats

Today DI PRO is launching a new live dashboard for new gTLD program statistics.
The idea is to give users quick and easy access to key program metrics.
Want to know the maximum number of gTLDs that can be delegated in the current round? It’s 1,365.
Want to know how many contention sets remain? It’s 222.
Want to know how many how many applications have failed Initial Evaluation? It’s 4.
Here’s a partial screenshot:

While almost all of this data has been easily accessible via the DI PRO New gTLD Application Tracker for months, the new Live Stats interface provides a quicker, at-a-glance view.
All the stats are generated live from the DI PRO database, which is updated at least once a day with the current status of all 1,930 new gTLD applications. New IE results are added Fridays at 8pm UTC.
What’s more, users can drill down into detailed search results by clicking the stat they’re interested in.
User previews have been positive, but we’re always open to suggestions if there’s a stat you’d like to see included.
Subscribers can check it out here: Live New gTLD Stats.

Donuts loses five of the first six new gTLD auctions

The full results of the first six new gTLD auctions are now known. Donuts lost five of them, raising millions of dollars in the process.
Here are the winners of last week’s auctions, which were managed by Innovative Auctions:

• .club — .CLUB Domains.
• .college — XYZ.COM.
• .luxury — Luxury Partners.
• .photography — Donuts.
• .red — Afilias.
• .vote — Monolith Registry

Five of the six were a two-way battles between Donuts, which has applied for 307 gTLDs, and one other applicant. Each of the losing applicants has now withdrawn its application with ICANN.
The exception is .club, a three-way fight that included Merchant Law Group. Neither losing application has been withdrawn with ICANN yet, but the result it well-known.
Innovative revealed last week that the round raised $9.01 million in total. The winning bids for each auction were not disclosed.
Given that Donuts managed to lose five out of the six, it’s a fairly safe assumption that most of that money will have gone into its war chest, which can be used in future auctions.
Of the five applications it has now withdrawn, only .red had already passed its Initial Evaluation, so the company will have also clawed back a $130,000 ICANN refund on each of the other four.
The auctions mean that we now know with a high degree of certainty which companies are going to be running these six gTLDs.
Most of them have not yet passed IE, but with the success rate so high to date I wouldn’t expect to see any failures. None of them are subject to objections or direct GAC Advice.

ICANN hires former ARI exec to head gTLD relations

Krista Papac, formerly chief strategy officer with AusRegistry and ARI Registry Services, has joined ICANN as gTLD registry services director.
It appears to be a newly created job title at ICANN, though it sounds a little similar to the gTLD “liaison” role vacated by Craig Schwartz a couple of years ago.
Papac, a familiar face to many in the ICANN community, has been in the industry for over a decade.
Prior to ARI, which she left to become a consultant last September, she had stints at MarkMonitor, Verisign and Iron Mountain. She joined ICANN last month.
ICANN is hiring like crazy at the moment as it simultaneously gears up for the launch of new gTLDs and executes on CEO Fadi Chehade’s ambitious drive to simultaneously professionalize and globalize the organization.

Hong Kong telco drops dot-brand gTLD bid

Hong Kong Telecom has withdrawn its application for the new gTLD .香港電訊, the Chinese-script version of its brand.
The proposed single-registrant gTLD was uncontested, with no objections or Governmental Advisory Committee advice. It’s the 76th application to be withdrawn.
It was a defensive application. Under the heading “Goals”, HKT said: “An important goal of the TLD is the safeguard of the intellectual property right of the HKT and the 香港電訊 brand.”
The company hadn’t bothered to take advantage of the IDN bias in the prioritization draw and wasn’t due to have its Initial Evaluation finalized until the last two weeks of the process.

Microsoft objects to Google’s dotless domains plan

Microsoft has strongly urged ICANN to reject Google’s plan for a “dotless” .search gTLD.
In a letter sent a couple of weeks ago and published last night, the company says that Google risks putting the security and stability of the internet at risk if its .search idea goes ahead.
David Tennenhouse, corporate vice president of technology policy, wrote:

Dotless domains are currently used as intranet addresses controlled by private networks for internal use. Google’s proposed amendment would interfere with that private space, creating security vulnerabilities and impacting enterprise network and systems infrastructure around the globe.

It’s a parallel argument to the one going on between Verisign and everyone else with regards to gTLD strings that may conflict with naming schemes on internal corporate networks.
While they’re subtly different problems, ICANN recently commissioned a security study into dotless domains (announced 11 days after Microsoft’s letter was sent) that links the two.
As Tennenhouse says in his letter, ICANN’s Security and Stability Advisory Committee, which has Google employees on it, has already warned about the dotless name problem in SAC053 (pdf).
He also claims that Google had submitted follow-up comments to SAC053 saying dotless domains would be “actively harmful”, but this is slightly misleading.
One Google engineer did submit such a comment, but it limited itself to talking about clashes with internal name certificates, a slightly different issue, and it’s not clear it was an official Google Inc comment.
The new gTLD Applicant Guidebook currently outlaws dotless domains through its ban on “apex A records”, but that ban can be circumvented if applicants can convince a registry services evaluation panel that their dotless domain plans don’t pose a stability risk.
While Google’s original .search application envisaged a single-registrant “closed generic”, it later amended the proposal to make it “open” and include the dotless domain proposal.
This is the relevant bit of the amended application:

Charleston Road Registry will operate a service that allows users to easily perform searches using the search functionality of their choice. This service will operate on the “dotless” search domain name (http://search/) and provide a simple web interface. This interface operates in two modes:
1) When the user has not set a preference for a search engine, they will be prompted to select one. The user will be provided with a simple web form that will allow them to designate a search engine by entering the second level label for any second level domain registered with in the TLD (e.g., if “foo.search” was a valid second level domain name, the user could indicated that their preferred search engine was “foo”). The user can also elect to save this preference, in which case a cookie will be set in the userʹs browser. This cookie will be used in the second mode, as described below. If the user enters an invalid name, they will be prompted again to provide a valid response.
2) If the user has already set a preferred search engine, the redirect service will redirect the initial query to the second level domain name indicated by the userʹs preference, including any query string provided by the user. For example, if the user had previously selected the “foo” search engine and had issued a query for http://search/?q=bar, the server would issue a redirect to http://foo.search/?q=bar. In this manner, the userʹs query will be consistently redirected to the search engine of their choice.

While Google seems to have preempted some concerns about monopolistic practices in the search engine market, approval of its dotless search feature would nevertheless have huge implications.
Make no mistake, dotless domains are a Big Deal and it would be a huge mistake for ICANN to treat them only as a security and stability issue.
What’s weird about Google’s proposal is that by asking ICANN to open up the floodgates for dotless domains, it risks inviting the domain name industry to eat its breakfast, lunch and dinner.
If ICANN lets registries offer TLDs domains without dots, the new gTLD program will no longer be about delegating domain names, it will be about auctioning exclusive rights to search terms.
Today, if you type “beer” into your browser’s address bar (which in all the cases I’m aware of are also search bars) you’ll be directed to a page of search results for the term “beer”.
In future, if “beer” is a domain name, what happens? Do you get search or do you get a web page, owned by the .beer registry? Would that page have value, or would it be little better than a parking page?
If browser makers decided to implement dotless domains — and of course there are plenty of reasons why they wouldn’t — every borderline useful dictionary word gTLD would be sold off in a single round.
Would that be good for the internet? I’d lean toward “no”.

Late new gTLD objections “not unfair”

ICANN Ombudsman Chris LaHatte has ruled that the decision to accept formal new gTLD objections sent one minute after the filing deadline “does not create unfairness”.
The decision is a blow to at least one applicant, which had tried to have an objection against it kicked out for being late.
LaHatte received a complaint from the applicant, believed to be represented by Galway Strategy Group’s Jim Prendergast, last month.
The complainant said that an objection by a competing applicant was sent at 00:01:02 UTC on March 15, one minute and three seconds after the deadline laid out in ICANN’s Applicant Guidebook.
But the dispute resolution providers hired by ICANN to manage objections decided to give a little leeway, agreeing among themselves (with ICANN’s tacit consent) to a five-minute extension.
Now LaHatte has decided — entirely reasonably in my view — that this was not unfair.
He wrote: “It is my view that a five minute window is a proportionate response and does not create unfairness for the applicants, but does provide fairness given that it is only five minutes.”
He added that at least one other objection, which was filed much later, was rejected for its tardiness.

Big week for new gTLDs as 114 apps pass

ICANN has just released this week’s Initial Evaluation results and it’s the biggest dump to date, with 114 applications getting through to the next stage of the process.
We’re now up to 628 passes, which is roughly one third of the original 1,930 applications.
Applications for these strings achieved passing scores (links to DI PRO):

.help .hosting .property .fashion .warman .love .yoga .winners .bnl .sexy .bauhaus .mnet .health .gratis .save .cfd .inc .tjmaxx .homegoods .tjx .deal .restaurant .spa .link .tech .airbus .city .dealer .bnpparibas .tvs .latino .boo .makeup .website .tips .amp .jpmorgan .kyknet .dad .vivo .kerryproperties .sucks .emerson .sas .lancaster .vin .lotto .homes .rodeo .goldpoint .movie .next .bloomberg .moda .tennis .song .nrw .alfaromeo .web .press .london .hot .futbol .windows .webjet .green .sarl .home .video .apartments .bingo .hotel .allstate .software .lanxess .mango .ferrari .coupon .broadway .drive .gea .law .engineering .epost .swiftcover .country .army .weber .broadway .marshalls .style .theater .samsung .firmdale .design .booking .tatamotors .komatsu .mls .abudhabi .vip .game .alibaba .like .store .lgbt .team .boats .tax .nikon .sony .you .citic .trade

No applications failed this week. We’re up to 700 in the prioritization queue.