Company suggests that drawing attention to comment period distorted the multistakeholder process.
The comment period for ICANN’s proposed .com contract amendment with ICANN closed last Friday. The amendment would allow Verisign (NASDAQ: VRSN) to increase prices in the future in 4 out of 6 years.
Among the thousands of comments was one from Verisign itself (pdf). Take a moment to read it.
Verisign’s letter suggests that domain name registrars and investors (or “speculators,” in its words) have “distorted and undermined the multistakeholder process by”…wait for it…
Encouraging people to comment during the comment period.
Some domain name registrars asked their customers to comment on the proposed amendment. Verisign argues that ICANN should discount the comments submitted by these customers. Verisign suggests that the registrars are aligned with domain investors (or speculators, in its words) and didn’t tell their customers the whole story (the way Verisign wants it to be told).
For example, Verisign implies that Namecheap customers are domain investors, so comments from Namecheap customers should be discounted. To make the case that Namecheap customers are investors, Verisign points out that someone registered Covid-19.com at Namecheap, presumably intending to make money from the domain. It also notes that Namecheap lists premium domains on its site. Ergo, Namecheap customers must be domain investors.
Certainly, nudges from Namecheap and other registrars, as well as Internet Commerce Association, had a big impact on the comment period. People and companies submitted nearly 9,000 comments. Most of the people who commented wouldn’t have been aware of the comment period without the registrars notifying them or if the press hadn’t picked up on it.
Verisign wants to make sure that ICANN doesn’t consider each comment a vote, and points to U.S. government guidelines that state that comments to government agencies are not votes, and some carry more weight than others.
That’s undoubtedly true. If comments were considered votes, then .org price caps wouldn’t have been eliminated.
What Namecheap, Internet Commerce Association and several registrars did during the comment period happens all of the time in government. Groups like the American Cancer Society, veterans groups, etc. frequently encourage their supporters to comment to government officials or to comment to agency decision-makers. Otherwise, the decision-makers would never hear from the grassroots. Agencies need to hear from the people affected by policy decisions.
Verisign suggests that commenters on the .com proposal are acting in their self-interest. Of course, people of these groups are commenting in their own self-interest. Whether it’s to get more government funding for medical research or veterans benefits, or to advocate for net neutrality, people rarely submit comments that are against their self-interests.
Verisign is looking out for its own best interests, investors and domain registrants for theirs. Individual domain registrants who found out about the comment period from their registrars or media are also commenting in their interests. I doubt that many registrants would comment in favor of paying more money in the future. Just like Verisign wouldn’t comment that it thinks prices should be limited.
I’m a businessperson and a capitalist. I realize that Verisign has one job: maintain its control of .com and extract as much revenue as it can from it. That’s management’s duty and that’s what its shareholders want.
It’s the way it goes about it that draws the ire of industry watchers and shows just how strange the market dynamic of having a no-bid, presumptive renewal contract is.
I had a discussion about Verisign with someone (who was not a domain investor) last year. When I pointed out that Verisign has to work on behalf of its shareholders, he said (and I’ll paraphrase), “Yeah, but they don’t have to be such [jerks] about it.”
Or, as Kevin Murphy wrote, “The chutzpah on this company is sometimes jaw-dropping.”
Verisign has certainly been disingenuous in suddenly saying that domain investors are bad. It created products and tools for domain investors, and wined and dined them to try to get them to buy more domain names. This was especially the case in recent years when Verisign wasn’t able to increase .com prices. The only way it could keep its revenue numbers marching upward was to sell more domains. Natural demand wasn’t enough; it needed domain investors to register domains.
Now that price hikes are on the table, the company has done an about-face.
Verisign realizes that domain investors are easy to pick on. Nobody really likes domain investors. And while Verisign attacks investors, investors are busy singing the praises of .com.
By implying that most commenters are investors, Verisign is trying to discredit all comments.
In most industries, customers who were treated like this by their supplier would find another supplier. But Verisign is the only supplier of .com domain names.
Verisign has played the long game to maximize revenue from its control of .com. It created Site Finder and then got the better hand over ICANN in settling the ensuing lawsuit.
Vint Cerf was Chairman of the Board of ICANN during that fiasco. In 2006, he told the crowd at Domain Roundtable that he saw the resolution as the best possible outcome at the time. The outcome was that Verisign received the .com contract in perpetuity.
That was a huge win for Verisign, but Verisign got perhaps an even bigger win at the end of 2018. That’s when the U.S. government amended its Cooperative Agreement with Verisign. It would allow, assuming ICANN agrees, for Verisign to increase .com prices 7% in the last four years of each six-year contract. While that’s a win for Verisign over the remainder of the current contract period, the biggest win is that Verisign gets this right in perpetuity. The agreement can only be modified by mutual agreement of the U.S. government and Verisign. So future administrations can’t remove the price hikes–only ICANN can. The amendment was worth billions of dollars to Verisign.
Oh, and it also hired the former counsel for the Internet Commerce Association to help it make arguments against domain investors and price controls.
You have to hand it to Verisign. It has played its cards well.
But apparently, this isn’t enough. The day after it got that multi-billion-dollar gift from the U.S. government (again, assuming ICANN agrees to it), it wrote an inflammatory blog post about domain investors. This suggests that either Verisign doesn’t want to settle for 7% price increases or it’s just really vindictive.
Here’s how I think this will play out: despite overwhelming opposition to price hikes, ICANN will go forward with its amendment. It will say it’s no longer a price regulator and is just deferring to the U.S. government on pricing.
Verisign will increases prices. Domain investors and registrants will grumble. Verisign will push the levers as far as it can, perhaps asking the U.S. government to remove price caps altogether.
At some point, though, the company will become so insanely profitable that more people will take a look. They might even nudge antitrust forces.
Or maybe a big company with thin margins will buy Verisign and neatly tuck the costs into its overhead, hiding this money-printing press inside its books.
>Now that price hikes are on the table,
>the company has done an about-face.
Because Verisign wants domain investor’s arbitrage opportunities rolled up into itself, just as Ethos does.
As we saw with nTLD deployment, the methods used by the secondary market to sell domains moved UP into the registries.
This is exactly what Ethos and Verisign wants, to set prices at thousands so they get the move the arbitrage income into themselves. Demonizing others is the method to achieve this, and what will they call themselves when they set the prices at thousands?
THEY want to be the domain name investors, they just hide behind the fact that they are doing it at the first domain name level, AKA “TLD”.
As I have have been challenged on this point before, so please note the following:
As you see, “TLDs” are in fact domain names, they just are not often used (“zoned”) as such and are normally only used one level under them.
Thus proves .ORG is a domain name, and .COM is a domain name, and Verisign is the most successful domain investor of all time.
You may need to cut and paste that URL into your browser. This esoteric form of the URL might address the issue certain browser may when clicking on the link above:
The dot on the right refers to the ROOT servers. This is the canonical form of a URL but browsers are coded to handle URLs without the dot to save users that character. For example, stick a dot on the right of any domain name and note is has no effect on the URL.
If that link does not work in your browser try one of these:
Its a browser issue as using / zoning domains at this level is so rare it exposes browser bugs when handling such URLs.
Or just cut and paste them into your browser. I see the version of FireFox I am using will not work when clicking on the links, but works fine when cutting and pasting them into the brower … Again its a browser bug.
The venomous response by Verisign contains carefully crafted language full of chest-thumping bravado. As you pointed out, it’s laden with inaccuracies and most likely serves as both a soft threat to ICANN, and as a notice of appearance to its shareholders. Interestingly, it’s not signed by a specific person.
john berryhill says
The writing style is characteristic of an individual and quite familiar to persons who have been around a while.
Or there is a new US administration after the 2020 US elections that will put an end to this ugly monopoly and have the .COM contract put to competitive bidding.
I think contract amendment allowing first price increase on October 2020 (just one month before the US elections) is not mere coincidence.
This way Verisign is sure to get at least one price increase in case the wind turns.
Zak Muscovitch says
Note that on February 11, 2020, ICANN President & CEO, Göran Marby stated inter alia:
“Public Comment is an important part of ICANN’s processes and is fundamental to the multistakeholder model of Internet governance.I encourage all stakeholders to get involved and submit their comments before it closes this Friday, 14 February 2020.”
And that’s precisely what stakeholders did.
Mark Thorpe says
Exactly! Verisign is being a cry baby and bully, they are used to getting their own way.
They didn’t even have the guts to sign the letter that they sent to ICANN!
This is your chance ICANN, it’s time to man up, take a stand and say NO to Verisign and Ethos Capital to save .COM and .ORG!
Domain registrants would rather give our money to ICANN then to Verisign and Ethos. ICANN – wake up – you can make so much more money whilst not being captured and being subservient to the legacy registries whom you INACCURATELY gave presumptive rights of renewal to. Stand up for the Internet, not for two really big boys who stomp all over the Internet to the Internet’s misfortune. I implore you, ICANN, to seek counsel from the DOJ and tell them the predicament, tell them you need their help getting this undone. Then, when you put this out to competitive bid, ICANN will make billions from the periodic bids, you will do the Internet a favor, you will reap the rewards, not Verisign, not PIR, not Ethos. You have a HUGE opportunity right in front of you. Sit down with the DOJ and ask for their involvement! Right now you have created a huge antitrust issue between ICANN/PIR/Ethos/Verisign. You pigeonholed yourselves back in 2002 or so. But YOU CAN FIX IT. Take the lead, seek allies with the DOJ. Show the world you care. And then you will go from being the scum of the Internet, enabling monopolists, to being the savior who is fixing the system and helping foster a better Internet. One without heavy handed registries who dictate what you do. And as I said, rebidding of the .com, .net and .org TLDs will be WINDFALL amounts of money for ICANN to use for public good!!!
Verisign has shown that it will say or do anything to hold onto its lucrative no-bid monopoly contract, including throwing the whole domain industry under the bus.
It’s just power games. Icann and Verisign are in bed together. Icann profits from the deal. The losers are the registrants, that is everyone else.
Verisign is a private company and it is expected that it will defend its interests and that of shareholders. On the other hand Icann is supposed to be acting for the common good and they have been pursuing the exact opposite.
All their actions have consistently been against the interests of registrants and the Internet community as a whole.
The consultation is a travesty, just like the .org consultation which was resoundingly clear – and ignored.
Who do they think they are ? This is OUR money. We never gave them permission to steal from our wallets for nothing in return.
They are really behaving like government, but without accountability to the taxpayers and the fear of elections.
ICANN is most certainly prohibited from going against Verisign in any capacity because of the litigation settlement agreement in 2006. Both ICANN and Verisign agreed to a truce – and unfortunately this was the beginning of the tight relationship – which continues to harm consumers.
To learn more – go read up on CFIT vs. Verisign federal lawsuit.
How can ICANN act in the public interest and be a good steward of the DNS if its hands are tied and it is never allowed to challenge or speak out against Verisign? ICANN is required to treat Verisign differently than everyone else. This is not in the ‘ethos” of the multi-stakeholder model.
When one party has undue influence over the other – and when the other continually looks the other way and defends its largest contracted party – this is a fundamentally broken model of governance.
I assume ICANN is trapped and has no way out. It is beholden to Verisign and nobody else.
ICANN wants everyone to believe the multi-stakeholder model is alive and well – but unfortunately the model has been entirely captured by Verisign.
Deeply troubling Verisign is essentially asking ICANN to ignore public comments.
Verisign, the monopoly, that has the sole sourced contract to operate .com and .net in perpetuity, is asking ICANN to ignore public comments and look the other way. Under no circumstance, should Verisign have asked to ICANN to ignore any comments.
Verisign stands to generate billions and billions in supracompetitive profits from its anti-competitive contract (that was achieved as result of bullying ICANN and strong-arm litigation.)
Attempting to influence the public comment process – and suggesting to ICANN it should ignore – is extremely concerning.
We have an appearance by Zak Muscovitch here. My minor quibble over the topic of penalty for RDNH is of no interest to me right now. Instead, I have announced that Zak Muscovitch’s Nov 2018 CircleID article on this matter is required reading for all domain investors AND domain end users for the cause and the greater good:
NOTE: Don’t let me find out any of you didn’t read it. It will not go well for you.
We are all being Bidzossed by Verisign!
If this is the way Verisign treats its customers in the open public, how does Verisign treat ICANN behind closed doors?
Does Verisign continue to bully and threaten ICANN?
Does Verisign suggest they will initiate litigation if ICANN does not flow through pricing changes?
Does Verisign use leverage or other tactics over ICANN and its board to get its way? and to what extent does Jones Day hide and shield all of this from the ICANN board?
what has Jones Day/ John Jeffrey not disclosed to the ICANN board about its relationship with Verisign?
Who is really in control here?
Rubens Kuhl says
I will add me to the crowd that has seen VRSN act like jerks; I can get into details on why in in-person conversations with anyone who wants to know.
“You have to hand it to Verisign. It has played its cards well.”
Yep, any smart businessman would pull the same kind of stuff.
The issue is that Icann has not properly regulated this monopoly, and that made it into a far bigger monopoly than it was by granting rights in perpetuity. The fault does not sit at Verisign’s feet. The problem is Icann who have allowed all this and failed to take the contract to tender.
ICANN should just let Verisign take the sitefinder stuff to court.
Fadi destroyed ICANN, and now stands to profit from this broken organization.
Arpit Agrawal says
This is going to be bad for domain name investors. The rule of 7, that someone recently shared in a comment on NamePros, regarding the same article, is going to come bite up 4 years from now.
After reading this, I happened to search Quora and other places to find what people are talking about regarding the topic. I came across this thread on NamePros where Joe Styler, a Godaddy staff urges people to share their opinion on ICANN.
Sharing the link here:
I just went to get a quote from Verisign’s comment, the link no longer works. Am I doing something wrong or was their comment removed? Thanks!
Andrew Allemann says
I’m not sure why, but the URL changed. I updated the link in my story.
Such market laws. Stronger or smarter dictates the terms.