I have a hard time understanding how a private auction would be illegal in the case of new TLD allocation.
A couple weeks ago a new TLD applicant told me they weren’t participating in private TLD auctions because they thought the auctions would ran afoul of U.S. laws.
Now we have some confirmation that there are at least legitimate concerns, as Uniregistry announced that the Department of Justice declined to issue a business review on the topic. (It was an oral briefing, so we don’t know the full rationale. The DOJ isn’t saying that the auctions would be illegal; they’re just not saying up front that they aren’t.)
When I first heard the idea that holding a private auction instead of an ICANN auction could violate anti-trust rules, I had to think through it a bit.
In many scenarios it would seem obviously illegal. Consider this scenario:
Two of us are the only people to backorder at particular domain at NameJet. Instead of duking it out and paying NameJet $10,000, we hold a private auction between us and settle on a price. We then pay NameJet the minimum backorder fee.
It’s pretty obvious how that would be illegal.
But in the case of new TLD auctions, ICANN has expressly said it doesn’t want to hold any auctions. It wants applicants to sort things out amongst themselves. It would rather have one final applicant for .app come to the table at the end than have to hold an auction.
ICANN isn’t interested in getting more money from auctions. It just wants to delegate each TLD to one company with as few headaches as possible.
It’s a very different scenario than the NameJet bidding example where we are ripping off the auctioneer.
Let’s say that the idea of private new TLD auctions is a legitimate legal issue because the applicants would be depriving ICANN of its auction revenue.
In that case, wouldn’t any settlement between applicants run afoul of the law?
Even if there are no formal auctions ahead of an ICANN auction, there will be lots of settlements and payoffs for other applicants to go away. Whether that’s giving away equity through a partnership or flat out paying cash, that’s really just an informal auction, isn’t it? How would this not also be illegal? If it is illegal, ICANN auctions will be the only to settle contention sets that still exist after objections and community decisions. That’s the last thing ICANN Wants.
While I understand the concerns about private auctions, I have a hard time understanding the logic of how this could be a legal issue in this specific application.