EU tells ICANN to Go Back to the Drawing Board on Auctions!

The European Commission is not a big fan of the David versus Goliath ICANN new gTLD auction scenario.

On December 12 last year, ICANN released a set of revised public auction rules. These auctions are presented as the avenue of last resort for resolving new gTLD contentions.

As is ICANN’s custom, the rules were put out for public comment. The EU submitted its statement on the very last day of the comment reply period.

The European Commission’s Communications networks, Content and Technologies Directorate-General (DG CONNECT for short) voices deep concerns for what several others have identified as a risk of seeing powerful applicants use their financial clout to squash more innovative TLD operating models.

The EU dubs these “portfolio applicants”. Those who have applied for a spate of strings and used the same business model throughout to make operating them more cost effective. In the cross-hairs are companies like Google, Amazon and Donuts.

Facing them are much smaller applicants forced to swap the fat chequebooks they don’t have with clever ideas. “We are deeply concerned about the implications that the Auction Rules in the gTLD program may have for the protection of public policy interests, competition, openness and innovation,” says the EU. “As expressed in several comments already submitted during the comment period, the current Auction Rules are advantageous for portfolio applicants rather than for small, innovative and community applicants, which is at odds with the “diversity and innovation” policy that ICANN seeks to promote.”

Unconvincing auction rules

The EU is calling for a fairer auction process. “It would be desirable to give these applicants a more even playing field when they come up against larger portfolio holders in the contention process. Also, ICANN’s auction rules has not yet proven convincing to the community and deserves being revisited in light of the input received.”

The EU argues that because of the way the rules are currently drawn up, larger applicants have no reason to even talk to the smaller guys. “There seems not to be any incentive for financially strong applicants to solve the contention ‘through voluntary agreement among the involved applicants’,” says the EU, quoting the spirit of contention resolution the gTLD Applicant Guidebook, whereby discussions between applicants are promoted as the more desirable way to resolve contentions. “This solution places an unnecessary burden on applicants and departs from the artificial assumption that parties are eager to negotiate.”

With other problem areas — the need for community applications to be given preferential treatment, for security and consumer protection considerations to become a fundamental requirement of the process, and for more clarity on how the auction proceeds will be used – the EU is calling on ICANN to revisit its current auctions plans: “We are confident that community input received will allow ICANN to amend the current draft Auction Rules (version 2013.12.12) in a manner consistent with ICANN’s objectives and fully rooted in the principle of fairness.”

By Stéphane Van Gelder, Chairman, STEPHANE VAN GELDER CONSULTING on CircleID

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