ICANN is to ban new gTLD applicants from paying each other off if they apply for the same strings, removing a business model that saw tens of millions of dollars change hands in the 2012 application round.
But, in a twist, applicants will be able to submit second-choice strings along with their main application, allowing them to switch if they find themselves in contention.
While ICANN’s board of directors has yet to pass a resolution on private resolution in forthcoming application rounds, chair Tripti Sinha said in a letter to the GNSO Council (pdf) and blog post that there’s agreement on three principles.
“Private resolution of contention sets will not be permitted during the Next Round,” Sinha told the Council. The idea of permitting joint-venture resolution was also ruled out as impractical and open to gaming.
This of course means that where contention sets do occur, they’ll be resolved with a “last resort” auction where ICANN gets all the cash from the winning bidder.
Funds raised this way in the last round, along with a decade’s worth of investment interest, have been used to replenish ICANN’s reserve fund, to fund the current Grant Program, and may be shortly used to subsidize the Applicant Support Program.
Second, applicants will be able to submit at least one alternate string with their applications, allowing them to avoid a contention set and last resort auction.
This potentially makes the cost of acquiring a gTLD cheaper for the applicant while increasing the number of gTLDs that go live. ICANN might also have to issue fewer refunds for withdrawn applications.
ICANN thinks this measure might make gTLDs more affordable for less well-resourced applicants from the Global South, where ICANN is keen to diversify the industry, although the applicants may not get their first-choice strings.
Applicants would only be able to switch to an alternate string, which they will have to have pre-selected, if doing so would not create a new contention set or make the applicant join a different existing contention set.
They’d also only be able avoid a contention set of exact-match strings, and not sets subsequently created by the String Similarity Review or String Confusion Objection results.
So, to take an example from 2012, any of the seven .hotels applicants would have been able to switch to a second-choice string immediately after Reveal Day, but not after the similarity review placed them in contention with .hoteis.
The third point of agreement from the board is that the last resort auctions should keep the ascending-clock second-price method used for the 2012 round, deciding against lotteries or the Vickrey auction method.
The ascending clock method sees bids filed in rounds until all bidders but one had dropped out. The last applicant standing then pays ICANN the last price offered by the runner-up.
A Vickrey auction would have seen applicants submit their maximum bids at the time of application, not knowing who they were bidding against. Lotteries are legally problematic under California gambling law.
Sinha said the board intends to pass a resolution embodying these three principles “in the coming weeks”.
This is going to create some extra work for the GNSO, as ruling out joint ventures as a means to private resolution goes against community policy recommendations (and the board’s adoption of those recommendations).
The GNSO Council is set to discuss Sinha’s letter at its regular monthly meeting this Thursday.
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Tagged: auctions, contention, ICANN, new gTLDs, next round