Verisign lays it all out in SEC filing

Risk disclosures heavily focused on new top level domain names.

Verisign filed its 10-Q with the SEC last week. Comparing the risk factors section to the one in the previous quarter, it hasn’t changed much. Yet it’s interesting to see how changes at ICANN and new TLDs are finding their way into the risks section.

Here are some highlights:

the impact of decisions by distributors to offer competing or replacement products or modify or cease their marketing practices;

This relates to new top level domains, as well as other registries doing marketing deals with registrars to push their domains over .com and .net.

the impact of ICANN’s Registry Agreement for new gTLDs, which requires the distribution of new gTLDs only through registrars who have executed the new Registry Accreditation Agreement (“RAA”).

Essentially all registrars will have to sign the 2013 RAA before selling new TLDs.

the availability of alternatives to our products;

New TLDs.

ICANN’s plan for the introduction of new gTLDs could cause security, stability and resiliency problems that could substantially and permanently harm our business;

This has been part of Verisign’s ongoing FUD campaign around new TLDs.

ICANN is mandated by the Affirmation of Commitments by the DOC and ICANN to uphold a “bottom-up” or “multi-stakeholder” Internet governance approach. We believe recent actions by ICANN have signaled a willingness to abandon this model on certain important issues that impact our business and the Internet community. If ICANN fails to uphold the multi-stakeholder model, it could harm our business and our relationship with ICANN;…

Another one of Verisign’s ongoing battles, which is certainly hurting the company’s business relationship with ICANN. Verisign told ICANN it believes it is failing to uphold the model, ICANN wrote back saying it’s wrong.

With the introduction of new gTLDs, many of our registrars, based upon their registrant needs, may choose to focus their short- or long-term marketing efforts on these new offerings and/or reduce the prominence or visibility of our products and services on their e-commerce platforms, and if we are unable to maintain their focus on our products and services or move through them to engage the same registrants, this could harm our business.

In other words, will registrars start showing new TLD options higher up in results than .com and Verisign’s other TLDs?

If other registries launch marketing campaigns for new or existing TLDs, including forms of marketing campaigns that we are prohibited from running under the terms of our agreements with ICANN, which result in registrars or their resellers giving other TLDs greater prominence on their websites, advertising or marketing materials, we could be at a competitive disadvantage and our business could suffer.

Similar issue here, except that Verisign’s contract may be more restrictive in requiring it to make the same offers to all registrars.

ICANN plans on offering a second round of new gTLDs after the completion of the initial round, the timing of which is uncertain. In addition, as set forth in the Verisign Labs Technical Report #1130007 version 2.2: New gTLD Security and Stability Considerations released on March 28, 2013, we believe there are issues regarding the deployment of the new gTLDs that should be addressed before any new gTLDs are delegated, and despite our efforts some of these issues have not been addressed by ICANN sufficiently, if at all.

Again, part of Verisign’s ongoing campaign to slow down the introduction of new TLDs.

There is one paragraph that appears to be new in the latest report regarding Verisign’s roll managing the root zone:

Under its new gTLD program, ICANN intends to recommend for delegation into the root zone up to 1,400 new TLDs potentially within a compressed timeframe. On October 23, 2013, the DOC authorized the delegation of the first four new IDN gTLDs. In view of our role as the Root Zone Maintainer, and as a root operator, we face increased risks should ICANN’s delegation of these new TLDs cause security and stability problems within the DNS and/or for parties who rely on the DNS. Such risks include potential instability of the DNS including potential fragmentation of the DNS should ICANN’s delegations create sufficient instability, and potential claims based on our role in the root zone provisioning and delegation process. These risks, alone or in the aggregate, have the potential to cause serious harm to our Registry Services business. Further, our business could also be harmed through security, stability and resiliency degradation if the delegation of new TLDs into the root zone causes problems to certain components of the DNS ecosystem or the third parties routing Internet communications present inconsistent data for these new TLDs or other aspects of the global DNS or other relying parties are negatively impacted as a result of unaddressed domain name collisions.