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Demand Media commits five TLDs to private auctions, but three are dead on arrival

Demand Media throws five domains into private auction ring, but three are against competitors who won’t participate.

United TLDDemand Media subsidiary United TLD has committed five of its applied-for top level domains to the first private domain auctions to be handled by Peter Cramton.

The five domains are .fishing, .green, .mom, .rip, and .wow.

Donuts recently committed 63 domains to the same auction.

In order for an auction to take place, all applicants for the string must participate. Three of the domains United TLD committed are in contention sets with applicants who have already said they won’t participate.

Top Level Domain Holdings has applied for .fishing and .green. Uniregistry applied for .mom. Both companies have stated they won’t participate in private domain auctions due to concerns about anti-trust rules.

[Update: see note below regarding Top Level Domain Holdings, which may participate afterall.]

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  1. Antony Van Couvering says

    Actually, we are warming to the concept of private auctions.

    Yes, you want to make sure you’re not breaking the law, but it appears to us that is a very grey area legally, that ICANN is encouraging resolution, that the behavior here is not collusive but competitive, and that if you let lawyers identify risks for you all day long you’ll paralyzed. If two private auction players actually colluded with each other to set pricing, that would be one thing. But we’re not going to do that, and so we are now thinking that private auctions could be a good way to go.

    Antony

    • Andrew Allemann says

      Thanks for the update, Antony.

      I think your comment hits the nail on the head as to why participants don’t have to worry much about action by the D.O.J.

  2. Brad Mugford says

    “Yes, you want to make sure you’re not breaking the law, but it appears to us that is a very grey area legally, that ICANN is encouraging resolution, that the behavior here is not collusive but competitive”

    I have a couple points to make here –

    1.) Even if ICANN says they are encouraging a resolution, which might include private auctions, it is not relevant to the legal question here. ICANN’s opinion does not carry any legal weight. It does not provide legal protection or immunity from a law.

    2.) Let’s use this same example for another type of auction. Let’s say a NameJet domain auction has 40 bidders. Is it OK for those bidders to organize a private auction, then only the winner of that bid will bid in the actual auction? I am pretty sure any objective party would call that collusion.

    Now what is the legal difference between those two examples? In both cases you are colluding to circumvent the auction process.

    It seems like the people with a financial interest in this are just going with “ICANN said it is OK” to defend a legally dubious process.

    Brad

    • Andrew Allemann says

      @ Brad – there’s a huge difference. If NameJet ASKED its customers to hold a private auction and then have only the one winner buy the domain, then it would be OK.

      That’s effectively what’s happening here, and it’s because ICANN and NameJet have completely different objectives.

  3. Brad Mugford says

    @ Andrew

    This is clearly not a black & white answer. Even the CEO of TLDH called it “a very grey area legally”.

    I will once again point out that ICANN’s opinion has no legal weight. They can not give you immunity from any law.

    The DoJ or other governmental agency will make the determination if this falls under collusion. The legal issues here have not been settled.

    Brad

  4. Brad Mugford says

    The result of both examples is exactly the same. You are using a private auction to circumvent the auction process that has been defined.

    You can take any example you want – a private auction to determine who bids on a storage auction, a private auction to determine who bids on a Picasso painting, etc.

    The only difference here is “ICANN said it is OK”.

    Now is that that a legally sound principle to allow collusion and avoid the defined auction process that has been established? That will be for others to determine.

    The people participating in these auctions are taking a legal risk. They will have to determine the risk/reward ratio before proceeding.

    Brad

    • Andrew Allemann says

      @ Brad – they are not the same. In one case there’s an injured party, in the other case there’s not.

      The sole reason there’s a law related to this is because there is supposedly an injured party. But ICANN is not an injured party. It doesn’t want the extra money. It is specifically asking the parties to resolve the contention themselves. ICANN’s “defined process” is for applicants to “collude”, if you will, rather than go to auction.

  5. Bryan G. says

    I haven’t followed this closely. Did ICANN say private auctions are OK?

    These external auctions would deprive ICANN of additional revenue. If the only party being potentially harmed by the external auctions is ok with it, I would think chances of legal action is small.

    • Andrew Allemann says

      @ Bryan G – ICANN has asked parties to work it out any way they can and then ICANN will hold an auction only if they can’t. ICANN doesn’t want the auction money.

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