ICANN says it can spend quarter-billion-dollar auction fund however it likes

ICANN can tap into its $236 million new gTLD auction fund whenever it wants, and there’s nothing the community can do about it, according to its board of directors.
The board this week said it has a “legal and fiduciary responsibility” over the money, and would be obliged to spend the cash to meet ICANN’s obligations if it ever needed to.
The statement came in a letter to the leaders of a community working group that this week published a set of preliminary recommendations (pdf) for how the money should be distributed.
The group — a cross-community working group or CCWG — laid out a few options for how the money should be administered, either by ICANN alone or in conjunction with a charitable third party, and distributed.
The money was collected from new gTLD applicants that participated in ICANN’s “last-resort” auctions to settle their contention sets. Over half of the money came from Verisign’s winning bid for .web, which is still being contested.
The CCWG said that the money should be used to:

• Benefit the development, distribution, evolution and structures/projects that support the Internet’s unique identifier systems;
• Benefit capacity building and underserved populations, and;
• Benefit the open and interoperable Internet

But the CCWG could not agree among itself whether ICANN Org or community groups such as the GNSO or GAC should be able to grab some of the cash, which is currently held in a special fund, separated from ICANN’s operational budget.
The group asked the board for its opinion, and the board responded (pdf):

ICANN maintains legal and fiduciary responsibility over the funds, and the directors and officers have an obligation to protect the organization through the use of available resources. In such a case, while ICANN would not be required to apply for the proceeds, the directors and officers would have a fiduciary obligation to use the funds to meet the organization’s obligations.

In other words: it doesn’t matter what rules you put in place, it’s our money and we’re duty-bound to spend it if we have to.
The board added, however, that ICANN Org “currently does not foresee a situation where it would need to apply for the proceeds”.
ICANN is pretty well-funded. It would have to hit hard times indeed before it needed to crack open the auction nest egg.
The board also said that supporting organizations and advisory committees would not be able to apply for funding because they’re not legal entities and wouldn’t pass the due diligence.
The CCWG’s initial report is now open for public comment until November 27.

ICANN number two Atallah is new CEO of Donuts

Akram Atallah, head of ICANN’s Global Domains Division, has quit and joined Donuts as its new CEO, DI has learned.
According to multiple sources, Atallah’s last day at ICANN was yesterday.
While neither company has announced the move yet, I gather that ICANN staff were informed by CEO Goran Marby today.
The news comes just a month after private equity firm Abry Partners, which counts former ICANN CEO Fadi Chehade among its partners, acquired Donuts for an undisclosed sum.
While the revolving door between industry and ICANN is pretty much continuous, Atallah is probably the highest-profile example since Kurt Pritz in 2012 and Peter Dengate Thrush in 2011.
As head of ICANN GDD, he was responsible for all things gTLD. Before the creation of the role, he was COO.
He was also interim president and CEO of the organization on two occasions, keeping the seat warm prior to the arrival of Chehade and Marby,
Atallah and Chehade also worked together in their pre-ICANN days in the software industry.
Donuts is of course the largest new gTLD registry in terms of TLDs, with 241 in its stable.
I’ve no word yet on where Bruce Jaffe, Donuts’ current CEO, is going, but I’ll update this post when I do.
Jaffe joined Donuts as chief a little over a year ago, replacing founder Paul Stahura.
Presumably, Jaffe was the turnaround guy and with Donuts’ acquisition secured the new owners figured it was time to hire an ops guy.
UPDATE 2022 UTC: Donuts just issued a press release in which it said that Jaffe will remain a senior adviser during the transition. It also said that Atallah starts in his new job November 12.
UPDATE October 10: ICANN said in a statement overnight that VP of DNS industry engagement Cyrus Namazi will head GDD on an interim basis, with support from CTO David Conrad.

ICANN blocks .islam after government veto

After six years, ICANN has finally killed off the applications for the new gTLDs .islam and .halal, due to objections from several governments.
It has also rejected the application for .persiangulf from the same applicant.
The decisions were made by the ICANN board of directors last Wednesday. The resolutions were published Friday night.
The board said: “it is apparent that the vast majority of the Muslim community (more than 1.6 billion members) object to the applications for .HALAL and .ISLAM.”
This actually means that the Organization of Islamic Cooperation, the 57-nation treaty group with a combined 1.6 billion nominal Muslim citizens, objected to the applications.
Several governments with large Muslim populations — including the UAE, Malaysia, Turkey, India and Iran — had also individually told ICANN on the record that they were not happy.
The view from these governments seemed to be that if there’s going to be a .islam, it should be run under the umbrella of a group such as the OIC, rather than some random tuppenny ha’penny gTLD registry.
In Christianity, the comparable gTLD .catholic is run by an affiliate of the world’s oldest pedophile ring, while .bible is being run as a propaganda tool by a group of sexually repressed, homophobic American evangelicals.
The ICANN board said its decision to reject .islam and .halal was in tune with its “core values” to protect the “public interest”.
The decision was based “on its consideration of and commitment to ICANN’s Mission and core values set forth in the Bylaws, including ensuring that this decision is in the best interest of the Internet community and that it respects the concerns raised by the majority of the community most impacted by the proposed .HALAL and .ISLAM gTLDs”.
It’s been avoiding making this decision since at least December 2013.
But it has now voted that the two applications “should not proceed”. It does not appear to have banned organizations from applying for the strings in subsequent application rounds.
The applicant for .islam and .halal was Turkey-based Asia Green IT System. It applications have been “on-hold” since the GAC issued non-consensus advice against them back in April 2013.
The OIC filed Community Objections against both gTLDs with the International Chamber of Commerce, but failed on both counts.
Having failed to see any progress, in December 2015, AGIT filed an Independent Review Process appeal against its treatment by ICANN, and won.
The November 2017 IRP decision held that the “on-hold” status was a “new policy”, unilaterally put in place by ICANN Org, that unfairly condemned AGIT’s applications to indefinite limbo.
The panel ordered ICANN to make its damn mind up one way or the other and pay about $270,000 in costs.
While rejecting the applications may not seem unreasonable, it’s an important example of a minority group of governments getting an essential veto over a gTLD.
Under the rules of the 2012 application round, consensus GAC advice against an application is enough to kill it stone dead.
But the GAC had merely said (pdf):

The GAC recognizes that Religious terms are sensitive issues. Some GAC members have raised sensitivities on the applications that relate to Islamic terms, specifically .islam and .halal. The GAC members concerned have noted that the applications for .islam and .halal lack community involvement and support. It is the view of these GAC members that these applications should not proceed.

That’s non-consensus advice, which is expected to initiate bilateral engagement with ICANN’s board before a decision is made.
In the case of .persiangulf, also applied for by AGIT and also now rejected, the GAC didn’t even give non-consensus advice.
In fact, in its July 2013 Durban communique (pdf) is explicitly stated it “does not object to them proceeding”.
This appears to have been a not atypical GAC screw-up. The minutes of the Durban meeting, published months later, showed that the Gulf Cooperation Council states had in fact objected — there’s a bit of a dispute in that part of the world about whether it’s the “Persian Gulf” or “Arabian Gulf” — so the GAC would have been within its rights to publish non-consensus advice.
This all came out when the GCC filed its own IRP against ICANN, which it won.
The IRP panel in that case ordered ICANN to outright reject .persiangulf. Two years later, it now has.
While the three gTLDs in question are now going into “Will Not Proceed” status, that may not be the end of the story. One “Will Not Proceed” applicant, DotConnectAfrica, has taken ICANN to court in the US over its .africa application.

CentralNic buys .fans for peanuts

CentralNic has acquired the flailing new gTLD .fans for an undisclosed sum.
The value of the deal was low enough that publicly traded CentralNic was not obliged to disclose the purchase to the market, CEO Ben Crawford confirmed.
The ICANN contract seems to have changed hands — transferred to a CentralNic subsidiary call Fans TLD Ltd — back in August.
We revealed back in May that CentralNic was acting as a caretaker for .fans, and sister TLD .fan, after original registry Asiamix Digital failed to make enough money to keep the business going.
.fan, which Asiamix bought from Donuts but never launched, was sold back to Donuts in June.
Donuts took .fan to sunrise last week and plans to take it to general availability in December.
.fans domains, meanwhile, have been in registrar storefronts since 2015, but the current tally of registered domains is barely above 1,600.
Domains are still selling for around the $100 mark, roughly double the expected retail price of .fan.

Here’s what ICANN’s boss is saying about Whois access now

Should ICANN become the sole source for looking up private domain registrant data? That’s one of the options for the post-GDPR world of Whois currently being mulled over on Waterfront Drive.
ICANN CEO Goran Marby laid out some of ICANN’s current thinking on the future of Whois last week at an occasionally combative meeting in Los Angeles.
One idea would see ICANN act as a centralized gatekeeper for all Whois data. Another could risk ICANN becoming much more tightly controlled by governments.
I’ve listened to the recordings, read the transcripts, chatted to participants, and I’m going to attempt to summarize what I believe is the current state of play.
As regular DI readers know, post-GDPR Whois policy is currently being debated to a tight deadline by an Expedited Policy Development Process working group.
The work has been a tough slog, and there seems to be little hope of the EPDP closing all of its outstanding issues before its first conclusions are due under three weeks from now.
One of the outstanding issues not yet addressed in any depth by the group is the potential creation of a “unified access model” — a standardized way cops, trademark owners, cybersecurity professionals and others could look at the same Whois data they could look at just a few months ago.
While the EPDP has carried on deferring discussion of such a model, ICANN Org has in parallel been beavering away trying to figure out whether it’s even going to be legally possible under the new European privacy law to open up Whois data to the people who want to see it, and it’s come up with some potentially game-changing ideas.
After weeks of conference calls, the EPDP working group — made up of 30-odd volunteers from all sections of the ICANN community — met in LA for three days last week to get down to some intensive face-to-face arguments.
I gather the meeting was somewhat productive, but it was jolted by the publication of an ICANN blog post in which Marby attempted to update the community on ICANN’s latest efforts to get clarity on how GDPR legally interacts with Whois.
Marby wrote that ICANN “wants to understand whether there are opportunities for ICANN, beyond its role as one of the ‘controllers’ with respect to WHOIS or its contractual enforcement role, to be acknowledged under the law as the coordinating authority of the WHOIS system.”
What did ICANN mean by this? While “controller” is a term of art defined in mind-numbing detail by the GDPR, “coordinating authority” is not. So ICANN’s blog post was open to interpretation.
It turns out I was not the only person confused by the post, and on Tuesday afternoon last week somebody from the EPDP team collared Marby in the corridor at ICANN HQ and dragged him into the meeting room to explain himself.
He talked with them for about an hour, but some attendees were still nonplussed — some sounded downright angry — after he left the room.
This is what I gleaned from his words.
No End-Runs
First off, Marby was at pains to point out, repeatedly, that ICANN is not trying to bypass the community’s Whois work.
It’s up to the community — currently the EPDP working group, and in a few weeks the rest of you — to decide whether there should be a unified access model for Whois, he explained.
What ICANN Org is doing is trying to figure out is whether a unified access model would even be legal under GDPR and how it could be implemented if it is legal, he said.
“If the community decides we should have a policy about a unified access model, that’s your decision,” he told the group. “We are trying to figure out the legal avenues if it’s actually possible.”
He talked about this to persons unknown at the European Commission in Brussels last month.
Whatever ICANN comes up with would merely be one input to the community’s work, he said. If it discovers that a unified access model would be totally illegal, it will tell the community as much.
Marby said ICANN is looking for “a legal framework for how can we diminish the contracted parties’ legal responsibility” when it comes to GDPR.
So far, it’s come up with three broad ideas about how this could happen.
The Certification Body Idea
GDPR sections 40 to 43 talk about the concepts of “codes of conduct” and “certification bodies”.
It’s possible that ICANN was referring to the possibility of itself becoming a certification body when it blogged about being a “coordinating authority”. Marby, during the EPDP meeting, unhelpfully used the term “accreditation house”.
These hypothetical entities (as far as I know none yet exist) would be approved by either national data protection authorities or the pan-EU European Data Protection Board to administer certification schemes for companies that broadly fall into the same category of data processing businesses.
It seems to be tailor-made for ICANN (though it wasn’t), which already has accreditation of registries and registrars as one of its primary activities.
But this legal avenue does not appear to be a slam-dunk. ICANN would presumably have to persuade a DPA or two, or the EDPB, that giving third parties managed access to citizens’ private data is a good thing.
You’d think that DPAs would be dead against such an idea, but the EU members of ICANN’s Governmental Advisory Committee have put their names to advice stating that Whois should remain accessible under certain circumstances, so it’s not impossible they could see it ICANN’s way.
The C.R.A.P. Idea
Marby’s second idea for taking some of the GDPR burden off the shoulders of contracted parties is to basically make ICANN a proxy, or man-in-the-middle, for Whois queries.
“What would happen if ICANN Org legally is the only place you can ask a question through?” he said. “And the only ones that the contracted parties actually can answer a question to would be ICANN Org? Would that move the legal responsibility away from the contracted parties to ICANN Org?”
In many ways, this is typical domain industry tactics — if there’s a rule you don’t want to follow, pass it off to a proxy.
This model was referred to during the session by EPDP members as the “hub and spoke” or “starfish”. I think the starfish reference might have been a joke.
Marby, in a jocular callback to the “Calzone” and “Cannoli” Whois proposals briefly debated in the community earlier this year, said that this model had a secret ICANN-internal code-name that is “something to do with food”.
Because whenever I’ve tried to coin a phrase in the past it has never stuck, I figure this time I may as well go balls-out and call it the “Cuisine-Related Access Plan” for now, if for no other reason than the acronym will briefly annoy some readers.
Despite the name I’ve given it, I don’t necessarily dislike the idea.
It seems to be inspired by, or at least informed by, side-channel communications between Marby and the Intellectual Property Constituency and Business Constituency, which are both no doubt mightily pissed off that the EPDP has so far proven surprisingly resilient to their attempts to get Whois access into the policy discussions as early as possible.
Two months ago, a few influential IP lawyers proposed to Marby (pdf) a centralized Whois model in which registrars collect data from registrants then pass it off to ICANN, which would be responsible for deciding who gets to see it.
Forget “thin” versus “thick” Whois — this one would be positively, arguably dangerously, obese. Contracted parties would be relegated to “processors” of private data under GDPR, with ICANN the sole “controller”.
Benefits of this would include, these lawyers said, reducing contracted parties’ exposure to GDPR.
It’s pretty obvious why the IP lobby would prefer this — ICANN is generally much more amenable to its demands than your typical registry or registrar, and it would very probably be easier to squeeze data out of ICANN.
While Marby specifically acknowledged that ICANN has taken this suggestion as one of its inputs — and has run it by the DPAs — he stopped well short of fully endorsing it during last week’s meeting in LA.
He seemed to instead describe a system whereby ICANN acts as the gatekeeper to the data, but the data is still stored and controlled at the registry or registrar, saying: “We open a window for access to the data so the data is still at the contracted parties because they use that data for other reasons as well”.
The Insane Idea
The third option, which Marby seemed to characterize as the least “sane” of the three, would be to have Whois access recognized by law as a public interest, enabling the Whois ecosystem to basically ignore GDPR.
Remember, back on on GDPR Day, I told you about how the .dk ccTLD registry is carrying on publishing Whois as normal because a Danish law specifically forces it to?
Marby’s third option seems to be a little along those lines. He specifically referred to Denmark and Finland (which appears to have a similar rule in place) during the LA session.
If I understand correctly, it seems there’d have to be some kind of “legal action” in the EU — either legislation in a member state, or perhaps something a little less weighty — that specifically permitted or mandated the publication of otherwise private Whois data in gTLD domains.
Marby offered trademark databases and telephone directories as examples of data sets that appear to be exempt from GDPR protection due to preexisting legislation.
One problem with this third idea, some say, is that it could bring ICANN policy under the direct jurisdiction of a single nation state, something that it had with the US government for the best part of two decades and fought hard to shake off.
If ICANN was given carte blanche to evade GDPR by a piece of legislation in, say, Lithuania, would not ICANN and its global stakeholders forever be slaves to the whims of the Lithuanian legislature?
And what if that US bill granting IP interests their Whois wet dream passes onto the statute books and ICANN finds itself trapped in a jurisdictional clusterfuck?
Oh, my.
Fatuous Conclusion For The Lovely People Who Generously Bothered To Read To The End
I’m not a lawyer, so I don’t pretend to have a comprehensive understanding of any of this, but to be honest I’m not convinced the lawyers do either.
If you think you do, call me. I want to hear from you. I’m “domainincite” on Skype. Cheers.

Chinese registrars on the decline

Having been on a growth trajectory for some years, the number of ICANN-accredited registrars based in China appears to be on the decline.
According to my records, so far this year 26 registrar contracts have been terminated, voluntarily or otherwise, 11 of which were Chinese. I’m excluding the mass drop of Pheenix accreditations from these numbers.
The country with the next-highest number of terminations was the USA, with three.
ICANN has terminated nine registrars for breaches of the RAA this year, six of which were Chinese.
All the Chinese notices included non-payment of ICANN fees as a reason for termination, though it appears that most of them had a negligible number of gTLD domains under management.
ICANN Compliance tells me there’s no particular focus of China at the moment, this is all a result of regular day-to-day enforcement.
ICANN has sent breach notices to 28 companies this year, seven of which were to Chinese registrars.
Meanwhile, 22.cn has moved 13 of its accredited shell registrars to Hong Kong. Another registrar moved its base from China to Australia.
Seven Chinese registrars have been newly accredited this year,
Net, this has all reduced the number of accredited registrars based in China to 91.
The country still has the second-most registrars ahead of the US, with its almost 2,000 registrars, and a clear 31 registrars ahead of third-place India.

It’s Drazek vs Dammak for GNSO Council chair

The chair of ICANN’s Generic Names Supporting Organization Council is contested this year, with a registry veep facing off against a software engineer.
The nomination from the contracted parties house is US-based Keith Drazek, Verisign’s VP of policy and government relations.
He’ll be opposed by non-contracted parties nominee and current vice-chair Rafik Dammak, a Tunisian working as a software engineer for NTT Communications (which is technically a contracted party due its dot-brand gTLD) in Japan.
Both men are long-time, active members of the ICANN community and GNSO.
The Council will pick its new chair about a month from now at the ICANN 63 meeting in Barcelona.
The winner will replace lawyer Heather Forrest, the non-contracted party who took the seat after an unopposed vote a year ago.

Cloudflare selling all domains at cost: “All we’re doing is pinging an API”

Content delivery network provider Cloudflare has promised to sell domains in all TLDs at the wholesale cost, with no markup, forever.
The company made the commitment yesterday as it announced its intention to get into the registrar business.
Founder Matthew Price used the announcement to launch a blistering attack on the current registrar market, which he said is charging “crazy” prices and endlessly upselling their customers with unwanted, worthless products. He blogged:

why should registrars charge any markup over what the TLDs charge? That seemed as nutty to us as certificate authorities charging to run a bit of math. When we see a broken market on the Internet we like to do something about it.
…
we promise to never charge you anything more than the wholesale price each TLD charges. That’s true the first year and it’s true every subsequent year. If you register your domain with Cloudflare Registrar you’ll always pay the wholesale price with no markup.
For instance, Verisign, which administers the .com TLD, currently charges $7.85 per year to register a .com domain. ICANN imposes a $0.18 per year fee on top of that for every domain registered. Today, if you transfer your .com domain to Cloudflare, that’s what we’ll charge you per year: $8.03/year. No markup. All we’re doing is pinging an API, there’s no incremental cost to us, so why should you have to pay more than wholesale?

There are catches, of course.
For starters, the service is not available yet.
Price wrote that Cloudflare will roll it out gradually — for inbound transfers only — to its “most loyal” customers over an unspecified period. Even customers on its cheapest plans will get access to the queue, he wrote.
Eventually, he said, it will be available “more broadly”.
It will be interesting to see if the no-markup pricing could become available to non-customers too, and whether it sticks to its business model when its support lines start ringing and it becomes apparent the business is actually big ole cash vampire.
Cloudflare has been ICANN-accredited for several years, but it’s only been offering registrations to high-value enterprise customers so far.
My records show that it has not much more than 800 domains under management, all in .com, .net, .org and .info.
The announcement was made, perhaps not coincidentally, a couple days after CRM software provider Zoho made headlines when its 40 million customers were taken offline because its former registrar suspended zoho.com over a trivial level of abuse. In response to the screw-up, Zoho transferred the domain to Cloudflare.

Chutzpah alert! DotKids wants ICANN handout to fight gTLD auction

New gTLD applicant DotKids Foundation has asked ICANN for money to help it fight for .kids in an auction against Amazon and Google.
The not-for-profit was the only new gTLD applicant back in 2012 to meet the criteria for ICANN’s Applicant Support Program, meaning its application fee was reduced by $138,000 to just $47,000.
Now, DotKids reckons ICANN has a duty to carry on financially supporting it through the “later stages of the process” — namely, an auction with two of the world’s top three most-valuable companies.
The organization even suggests that ICANN dip into its original $2 million allocation to support the program to help fund its bids.
Because .kids is slated for a “last resort” auction, an ICANN-funded winning bid would be immediately returned to ICANN, minus auction provider fees.
It’s a ludicrously, hilariously ballsy move by the applicant, which is headed by DotAsia CEO Edmon Chung.
It’s difficult to see it as anything other than a delaying tactic.
DotKids is currently scheduled to go to auction against Google’s .kid and Amazon’s .kids application on October 10.
But after ICANN denied its request for funding last month, DotKids last week filed a Request for Reconsideration (pdf), which may wind up delaying the auction yet again.
According to DotKids, the original intent of the Applicant Support Program was to provide support for worthy applicants not just in terms of application fees, but throughout the application process.
It points to the recommendations of the Joint Applicant Support working group of the GNSO, which came up with the rules for the support program, as evidence of this intent.
It says ICANN needs to address the JAS recommendations it ignored in 2012 — something that could time quite some time — and put the .kids auction on hold until then.

KSK vote was NOT unanimous

ICANN’s board of directors on Sunday voted to approve the forthcoming security key change at the DNS root, but there was some dissent.
Director Avri Doria, a Nominating Committee appointee, said today that she provided the lone vote against the DNSSEC KSK rollover, which is expected to cause temporary internet access problems for potentially a couple million people next month.
I understand there was also a single abstention to Sunday’s vote.
Doria has released a dissenting statement, in which she said the absence of an external, peer-reviewed study of the risks could prove a problem.

The greatest risk is that out of the millions that will fail after the roll over, some that are serious and may even be critical, may occur; if this happens the lack of peer reviewed studies may be a liability for ICANN, perhaps not legal, but in terms of our reputation as protectors of the stability & security of internet system of names.

She added that she was concerned about the extent that the public has been notified of the rollover plan, and questioned whether the current risk mitigation plan is sufficient.
Doria said she found comments filed by Verisign (pdf) particularly informative to her eventual vote, as well as comments from the At-Large Advisory Committee (pdf), Business Constituency (pdf) and Registries Stakeholder Group (pdf).
These groups had called for more study and data, better outreach, more clearly defined success/failure benchmarks, and more delay.
Doria noted in her dissenting statement that the ICANN board did not have a chance to quiz any of the minority of the members of the Security and Stability Advisory Committee who had called for further delay.
The board’s resolution, apparently arrived at after two hours of formal in-person discussions in Brussels at the weekend, is expected to be published shortly.
The rollover, which has already been delayed a year, is now scheduled to go ahead October 11.
Any impact is expected to be felt within a couple of days, as the change ripples out across the DNS.
ICANN says that any network operator impacted by the change has a simple fix: turn off DNSSEC. Then, if they want, they can update their keys and turn it back on again.