Donuts acquires four more gTLDs, but allows one to be scrapped

Donuts has acquired a portfolio of four finance-related new gTLDs, according to a source familiar with the matter, but is allowing a fifth string to fall onto the scrap heap of history.

I’m told Donuts will soon take over the ICANN contracts for .markets, .forex, .broker and .trading, which were all part of the Boston Ivy stable.

But its appears that Boston Ivy couldn’t find a buyer for .spreadbetting, which describes a complex form of gambling used in sports and financial markets, and has filed with ICANN to instead terminate its Registry Agreement.

You’ll recall that earlier this month I reported that ShortDot has acquired .cfd from Boston Ivy and plans to market it as “clothing and fashion design”, rather than its originally intended purpose of “contracts for difference”.

Both .spreadbetting and .cfd were unlaunched — both represent controversial forms of financial instrument — but the ones Donuts is acquiring already have a small number of registrations and active sites.

.markets, .forex, .trading and .broker have fewer than 4,000 registered names between them and appear to retail for between $17 and $50 per year.

I’ve lost track of precisely how many gTLD contracts Donuts currently controls, what with its recent acquisitions, but I’m pretty sure it’s pushing 300.

As for Boston Ivy, it’s game over as far as being a gTLD registry is concerned. Its only other string was .nadex, and it terminated that over a year ago.

Rival wants the truth about the Afilias-Donuts deal amid “collusion” claims

Portfolio gTLD investor Domain Venture Partners wants ICANN to fully explain its decision to approve Donuts’ acquisition of Afilias, claiming the deal gives the combined company an unfair advantage in the long-running battle for the .hotel gTLD.

DVP has filed a formal Request for Reconsideration with ICANN, tearing it a new one for seemingly going out of its way to avoid its transparency obligations when it came to the December approval of the acquisition.

ICANN’s board of directors had been scheduled to discuss the mega-deal at a special meeting December 17, but instead it carried out these talks off-the-books, in such a way as to avoid bylaws rules requiring it to publish a rationale and meeting minutes.

As I noted recently, it was the second time in 2020 (after the Ethos-PIR deal) the board resorted to this tactic to avoid publicly stating why it was approving or rejecting a large M&A transaction.

DVP notes the contrast with the Ethos-PIR proposal, which endured months of public scrutiny and feedback, adding in its RfR:

Why did the ICANN Board have a Special Meeting on this topic? Why did they not publish or otherwise identify a single background fact or point of discussion from the Special Meeting? Why did they not identify a single source of evidence or advice relied upon in coming to the decision? Why have they refused to provide even the slightest hint as to anything they considered or any reason why they came to their decision? How did they vote, was there any dissent? Nobody knows, because ICANN has kept all that secret.

The company argues that all this secrecy leaves itself and other registries at a loss to predict what might happen should they be involved in future acquisitions, particularly given the allegedly anti-bylaws “discriminatory” treatment between PIR on the one hand and Afilias on the other.

DVP stops short of asking for ICANN to overturn its decision to permit the acquisition — it would be moot anyway, as the deal has already closed — but it does demand that ICANN:

Provide complete, published rationale for the Resolution of Dec. 17, 2020 to essentially approve the Afilias acquisition of Donuts, including identification of all materials relied upon by the Board and/or Staff in evaluating the transaction, publication of all communications between Board, Staff and/or outside advisors relating to the transaction, and publication of all communications regarding the transaction between ICANN on the one hand, and Afilias, Donuts and/or Ethos Capital on the other hand.

Develop, implement, publish and report results of a clear policy as to what registry combination transactions will be approved or rejected, including clearly defined criteria to be assessed — and clearly defined process to assess that criteria – as to each and every future proposed transaction.

It’s interesting that nobody has filed a Documentary Information Disclosure Policy request for this information yet.

But it’s not all just about transparency for DVP. Its big concern appears to be its application for .hotel, which is in one of the few new gTLD contention sets still not resolved almost a decade after the 2012 application round.

DVP is the Gibraltar investment vehicle that controls the 16 new gTLDs that were formerly managed by Famous Four Media and are now managed by GRS Domains (which I believe is owned by PricewaterhouseCoopers). Dot Hotel Limited is one of its application shells.

Donuts is now in possession of two competing .hotel applications — its own, which is for an open, unrestricted space gTLD, and the Afilias-owned HTLD application, which is for a restricted Community-based space.

Back in 2014, HTLD won a Community Evaluation Process, which should have enabled it to skip a potentially expensive auction with its rival bidders and go straight to contracting and delegation.

But its competing applicants, including DVP and Donuts, challenged the CPE’s legitimacy with an Independent Review Process appeal.

To cut a long story short, they lost the IRP but carried on delaying the contention set and came back with a second IRP (this one not including Donuts as a complainant), which involves claims of “hacking”, one year ago.

The contention set is currently frozen, but DVP thinks Donuts owning two applications is a problem:

Donuts now owns or controls both that Community Application, and another pending standard application in the contention set for .hotel. There is no provision in the Applicant Guidebook for applicants to own more than one application for the same gTLD string. It certainly indicates collusion among applicants within a contention set, since two of them are owned by the same master.

…

DVP is concerned that Donuts may have no intention of honoring those Community commitments, and instead intends to operate an open registry.

DVP wants ICaNN to publish a rationale for why it’s allowing Donuts to own two applications for the same TLD.

It also wants ICANN to either force Donuts to cancel its HTLD application — which would likely lead to a .hotel auction among the remaining applicants, with the winning bid flowing to either ICANN or the losing applicants — or force it to stick to its Community designation commitments after launch, which isn’t really Donuts’ usual business model.

RfRs are usually resolved by ICANN’s lawyers Board Accountability Mechanisms Committee in a matter of weeks, and are rarely successful.

Coronavirus has made ICANN $11 million richer than predicted so far this year

ICANN made a lot more money and spent a lot less money in the second half of 2020, compared to the predictions made in its current budget.

Funding for the six months from July 1 to December 31 (the first half of ICANN’s fiscal 2021) came in $6 million higher than expected, at $69 million, according to data released by ICANN tonight.

Over the same period, its outgoings came in at $55 million, which was $5 million less than its approved budget had anticipated, leading to a net gain of $11 million.

The reason for the variance appear to be mostly related to the unanticipated positive impacts of the coronavirus pandemic.

Last April, when the FY21 budget was being drafted, ICANN thought the economic impact of the disease would prove a serious blow to the industry that funds it.

But the opposite turned out to be true. ICANN failed to predict that the government-enforced lockdown of large parts of the high street in many countries would see a rush by small bricks-and-mortar businesses to the interwebs.

This boosted domain growth for many companies and led to an increase in ICANN transaction taxes fees, which are paid whenever a domain is registered, renewed or transferred.

ICANN’s revenue was up across all three main segments in H1 FY21, when compared to its budget expectations.

Registry transaction fees were $2 million over budget at $27 million, and registrar transaction fees were also over by $2 million at $18 million. Registry and registrar fixed fees were also up by $1 million each, suggesting fewer companies terminated their contracts than expected.

“Funding higher than Budget driven by higher than planned transaction fees”, an ICANN slide deck (pdf) states.

On the expenses side, ICANN of course spent less cash on its meetings because it wasn’t subsidizing international flights and expensive hotels for 500-odd staff and community members.

“Lower Travel & Meetings due to travel restrictions from the COVID-19 pandemic”, the slide deck states.

Travel expenses, rounded, accounted for 0% or $0 of its H1 expenditure.

When the budget was passed in June last year, ICANN still thought it was possible that the October meeting would go ahead in-person in Hamburg, so it put aside $4.2 million to pay for it.

As it turned out, the Org ended up spending $100,000 on Zoom and other audiovisual services and another $400,000 on translation and interpretation services. And that was all.

The $2.2 million it expected to pay sending staff and community members to Hamburg came in at $0.

ICANN’s adopted budget for FY21 also anticipated the March 2021 meeting would go ahead in Cancun, Mexico, but that’s already been rescheduled for Zoom, which will save it a few million more bucks this year.

The Org hasn’t yet officially relocated its planned June 2021 in-person meeting from The Hague to Zoom, but I’m fairly confident it’s going to have to.

Its $12.2 million travel budget for FY21 is probably going to come in much closer to $2 million.

Public comments open on new Whois policies

It’s your last chance to comment on ICANN’s proposed revisions to Whois policy.

ICANN has opened up public comments on what it opaquely calls EPDP Phase 2 Policy Recommendations for Board Consideration.

Why it just can’t use the term “Whois access”, or announce its public comment periods in layman’s terms is beyond me. Doesn’t it want public comments? Still, translating this nonsense into English keeps me in work, so I guess I won’t complain too hard.

The main feature of the proposed policy is a multi-tiered, somewhat centralized system for requesting access to Whois data about private registrants that has been redacted since the EU’s General Data Protection Regulation came into effect in May 2018.

It’s called SSAD, for System for Standardized Access and Disclosure, which was pieced together by a working group of community volunteers over a year.

Domain companies are generally okay with the compromise it represents, but intellectual property interests and others who would actually use the system think it’s a useless waste of money.

It’s expected to cost $9 million to build and $9 million a year to run.

There’s so much uncertainty about the system that in parallel with the public comments ICANN is also consulting with the GNSO Council, which approved the proposals in September, to figure out whether it’s even workable, and with the European Commission to figure out if it’s even legal.

After the public comment period closes on March 30, the comments will be compiled by ICANN staff and burned on a big fire sent to the ICANN board for final approval.

ICANN CEO gets 5% pay rise

ICANN’s board of directors has awarded CEO Göran Marby a 5% pay rise after a review found that he’s being paid less than half of his peers at other companies.

Based on Marby’s last-reported base salary of $673,461, the increase amounts to a bump of $33,673.

He’s also still eligible for a 30% annual bonus, which he usually gets a piece of.

The board justified the move by stating that a third-party review found Marby’s salary was below 50% of CEOs at other non-profits, general industry and high-tech companies. Using for-profit companies in the mix sometimes proves controversial.

The board said that he’s only received one pay raise before in the five years he’s been on the job — a 3% increase in 2019.

His new pay comes into effect in July.

ICANN says its “compensation philosophy is to pay base salaries within a range of the 50th to 75th percentile of the market for a particular position.”

It says that even with the new raise, Marby’s pay still comes in outside of the lower end of that window.

Marby’s contract was recently extended by two years to 2024, over the objections of two directors.

ShortDot adds fourth gTLD to its stable, plans March launch

Another unused new gTLD has changed hands, ending up at ShortDot, the registry best-known for high-volume .icu.

ShortDot confirmed to DI today that it has acquired .cfd from its former owner, DotCFD.

The original plan for .cfd, one of the Boston Ivy collection of investment-related new gTLD applications, was for it to represent CFDs, or “contracts for difference”, a risky type of financial instrument that has proved sufficiently controversial that they’re not even legal in the US.

Since 2012, when the string was first applied for, CFDs have come in for serious criticism from market regulators and others due to the risk of significant losses they present to retail investors.

No .cfd domains have ever been sold, and it doesn’t appear to have ever properly launched, even though it’s been in the DNS root for five years.

But ShortDot COO Kevin Kopas tells me the plan is to repurpose the domain for an entirely different market.

“When we were contemplating the purchase and subsequent marketing angle we found that the traditional meaning of a CFD in the finance world doesn’t have the most positive connotation to it,” he said.

“We’re branding .cfd for the Clothing & Fashion Design industry and will be marketing it to entrepreneurs, bloggers, vloggers and others that are on the cutting edge of the fashion industry,” he said.

If that sounds like a stretch, you’re probably right — as far as I can tell, the fashion industry has never used that acronym and creating demand there will be a tall order. We’re in “professional web” territory here.

But Kopas said that ShortDot is already working with some influencers in the space “to create some pioneer cases that will go live at launch”. It’s also planning to attend fashion industry events after pandemic travel restrictions are over.

The company is planning to launch the domain with a first-come, first-served sunrise period beginning March 10 and ending April 12. General availability is slated for April 13 with a seven day early access period.

It’s the fourth unwanted gTLD ShortDot has acquired, repurposed and relaunched.

Its biggest success to date is .icu, a low-cost domain that proved popular almost exclusively in China and currently has 2.5 million domains in its zone file (down from a peak of 6.3 million less than a year ago).

ShortDot has shifted, then lost, so many .icu domains over the last two years that you’ve really got to factor out its influence if you want to get any sensible picture of what the new gTLD industry’s growth looks like.

It also runs .bond (2,500 names in its zone today) and .cyou (with 65,000).

One year on, Namecheap still fighting aborted .org takeover and may target GoDaddy and Donuts next

Even though Ethos Capital’s proposed takeover of Public Interest Registry was rejected last May, registrar Namecheap is still doggedly pursuing legal action against ICANN’s handling of the deal, regardless.

The Independent Review Process complaint filed last February is still active, with Namecheap currently fighting a recent ICANN motion to dismiss the case.

The company is also demanding access to information about GoDaddy’s acquisition of Neustar and Donuts’ acquisition of Afilias, and is threatening to file separate actions related to both those deals.

Namecheap has essentially two beefs with ICANN. First, that it should not have lifted price caps in its .org, .biz and .info registry contracts. Second, that its review of Ethos’ bid for PIR lacked the required level of transparency.

ICANN’s trying to get the IRP complaint thrown out on two fairly simple grounds. First, that Namecheap lacks standing because it’s failed to show a lack of price caps have harmed it. Second, that it rejected the PIR acquisition, so Namecheap’s claims are moot.

In its motion to dismiss (pdf), its lawyers wrote:

Namecheap’s entire theory of harm, however, is predicated on the risk of speculative future harm. In fact, nearly every explanation of Namecheap’s purported harm includes the words “may” or “potential.” Namecheap has not identified a single actual, concrete harm it has suffered.

…

Namecheap’s claims related to the Change of Control Request should be dismissed because ICANN’s decision not to consent to the request renders these claims moot
and, separately, Namecheap cannot demonstrate any harm resulting from this decision.

In December, Namecheap had submitted as evidence two analyses of its business prospects in the event of registry price increases, one compiled by its own staff, the other prepared by a pair of outside expert economists.

While neither shows Namecheap has suffered any directly quantifiable harm, such as a loss of revenue or customers, Namecheap argues that that doesn’t matter and that the likelihood of future harm is in fact a current harm.

A mere expectation of an increase in registry prices is sufficient to show harm. This is because such expectation reduces Namecheap’s expected profits and its net present value.

It further argues that if Namecheap was found to not have standing, it would give ICANN the ability to evade future IRP accountability by simply adding a 12-month delay to the implementation of controversial decisions, pushing potential complainants outside the window in which they’re able to file for IRP.

On the PIR change of control requests, Namecheap says it’s irrelevant that ICANN ultimately blocked the Ethos acquisition. The real problem is that ICANN failed in its transparency requirements related to the deal, the company claims.

The fact that ICANN withheld its consent is no excuse for refusing to provide full transparency with respect to the actions surrounding the proposed acquisition and ICANN’s approval process. Namecheap’s claims relate to the non-transparent process; not the outcomes of such process. Irrespective of the outcome, lack of transparency increases the level of systemic risk in Namecheap’s business environment.

…

How did ICANN come to its decision? Was an imminent request for a change of control known to ICANN, when it took the decision to remove the price control provisions? What was discussed in over 30 hours of secret meetings between ICANN org and the Board? What discussions took place between ICANN, PIR and other entities involved? All these questions remain unanswered

Namecheap refers to two incidents last year in which ICANN hid its deliberations about industry acquisitions by conducting off-the-books board discussions.

The first related to the PIR deal. I called out ICANN for avoiding its obligation to provide board meeting minutes in a post last May.

The second relates to the board’s consideration of Donuts’ proposed (and ultimately approved) acquisition of Afilias last December. Again, ICANN’s board discussed the deal secretly prior to its official, minuted December 17 meeting, thereby avoiding its transparency requirements.

In my opinion, this kind of bullshit has to stop.

Namecheap is also now threatening to bring the Afilias deal and GoDaddy’s acquisition of Neustar’s registry business last April into the current IRP, or to file separate complaints related to them, writing in its response to ICANN’s motion (pdf):

Namecheap seeks leave to have ICANN’s actions and inactions regarding its consideration of the Neustar and Afilias changes of control reviewed by this IRP Panel. If, per impossibile such leave is not granted, Namecheap reserves all rights to initiate separate proceedings on these issues.

The deals are similar because both involve the change of control of legacy gTLD contractors with millions of domains under management that have recently had their price caps lifted — Afilias ran .info and Neustar ran .biz.

Defensive windfall on the cards for .spa? It’s not just for spas any more

Forthcoming new gTLD .spa has published its planned launch dates and registrations policies, and it’s not just for spas any more.

Asia Spa and Wellness Promotion Council, the registry, has informed ICANN that it plans to take .spa to sunrise for 30 days starting April 20 and expects to go to general availability around the start of July.

But despite being a “Community” gTLD under ICANN rules, it appears to be also marketing itself at any Italian company that uses the S.p.A corporate suffix, which is generally equivalent to the US Inc/Corp and UK Plc.

According to its eligibility criteria (pdf), under the heading “Coincidental Community Guidelines”, proof of an Italian business address should be enough for any SpA company to qualify to register.

The registry’s web site at nic.spa currently says:

Apart from the spa and wellness industry, .spa can also be a abbreviation to represent:

• Società per Azioni (a form of corporation in Italy, Public Limited Companies By Shares)
• Sociedad por acciones (Joint-stock company in South American Countries)

This offers a great opportunity for entitles in Italy and South American Countries to registered a wonderful name.

This is interesting, because ASPWC applied for .spa as a Community applicant dedicated to the spa and wellness industry.

The primary reason it’s getting to run .spa rather than rival applicant Donuts is that ASPWC won a Community Priority Evaluation, enabling it to avoid a potentially costly auction against its deeper-pocketed competitor.

There’s no mention of Italians or South Americans in its 2015 CPE result (pdf).

Donuts fought the CPE result in ICANN’s Cooperative Engagement Process for three years, but eventually backed away for unknown reasons.

In its original application, ASWPC spends a lot of time discussing its “intended use” of .spa and possible overlap with other meanings of the string. Among this text can be found:

The use of “S.p.A.” as a short form for the Italian form of stock corporation: “Società Per Azioni” is also relatively much less prevalent than the word as intended for the spa community. Furthermore, a more proper and popular way of denoting the form of corporation is “S.p.A.” with the periods included. While this is an important usage of the string “SpA”, the Registry believes that it should not take away from the significant meaning of the word “spa” in its intended use for the spa community as a TLD. Furthermore, additional preventive measures can be put in place to mitigate against any concerns for abusive utilization of the TLD in this manner.

I could find no text explicitly ruling out the Italian corporate use in the application, nor could I find any indication that it was part of the hard-C “Community” upon whose behalf ASWPC was applying for, and eventually won, the gTLD.

The application does seem to envisage some kind of reserved names list that could include S.p.A companies, but that doesn’t appear to be what the registry has in mind any more.

Two more dot-brands take the easy way out

A US insurance giant with close to $50 billion in annual revenue has taken the decision to kill off its two dormant dot-brand gTLDs.

Nationwide Mutual Insurance has informed ICANN that it wants to cancel its .nationwide and .onyourside gTLD contracts.

Neither was being used beyond the obligatory nic.example web sites.

In fact, it appears that Nationwide cared so little about its dot-brands that both NIC sites inadvertently plug another, unaffiliated gTLD.

The text on both sites reads:

To better serve our members, Nationwide has secured a top-level domain.

Now, when you visit a Nationwide.Insurance website, you can have confidence that it’s from the company you trust – Nationwide.

But Nationwide does not run .insurance, that’s owned by fTLD. It does however have nationwide.insurance registered and parked with the same messaging.

They’re the 87th and 88th dot-brands to cancel their ICANN registry agreements.

Eight years after asking, Israel to get its Hebrew ccTLD

Israel is likely to be awarded the Hebrew-script version of its ccTLD, at a meeting of ICANN’s board of directors next week.

ICANN is poised to approved ישראל. (the dot goes on the right, in accordance with Hebrew writing practice), which means “Israel”, on February 8.

The beneficiary will be not-for-profit ISOC-IL, which has been running .il for the last 25 years. The Latin-script version currently has just shy of 270,000 domains under management.

ISOC-IL first expressed its interest in an internationalized domain name ccTLD (pdf) in 2012, but only received final technical approval from ICANN last May.

The proposal appears to have been held up by government delays in selecting a registry operator — government approval is a requirement under ICANN’s increasingly inappropriately named IDN ccTLD “Fast Track” program, which began in 2009.

It’s debatable how much demand there is for Hebrew domains. There are fewer than 10 million speakers in the world and most are very familiar with the Latin script.

Verisign’s gTLD קום., a transliteration of .com, has fewer than 1,700 domains in its zone file today, and is on a downward trend, two years after launch. Most are registered via local registrar Domain The Net, which had planned to compete with ISOC-IL for the IDN contract.