Platform will provide intelligence about other companies’ application plans before reveal day.
A big point of discussion about the last round of new top level domain expansion was settling contention sets. If more than one applicant applied for the same string, ICANN encouraged them to decide amongst themselves which applicant would get the domain. This led to private auctions between parties where the losers got paid by the winners.
The optics of these private auctions weren’t always great, and ICANN is concerned that people will apply in the next round with the sole purpose of trying to get paid for withdrawing their applications.
Instead of promoting private resolution like last time, a new rule prohibits this type of activity. Instead, applicants will be offered the chance to switch to a backup TLD, participate in an auction where ICANN retains the proceeds, or withdraw their application for a limited refund.
This prohibition on communication starts once the applied-for strings are revealed by ICANN. The applicant guidebook does not prohibit parties from discussing their plans before then.
A new platform hopes to help applicants avoid costly contention sets, or at least plan accordingly, by sharing application plans before applications are revealed.
Early Warning Report allows potential applicants to submit their planned strings and find out if other participants on the platform also intend to apply for them.
The service will operate in two phases.
In the first phase, before applications are due, prospective applicants can pay $1,000 per string to participate. Four weeks before the application window closes, they will be informed if any other parties submitted the same string. They will also be able to send a message to the other applicant(s). Messaging will be similar to using the Whois contact form; the recipient’s information won’t be shared unless they respond to the message.
The second phase will take place after applications are due but before strings are revealed. This stage will cost $3,000, or $2,000 if the same string was submitted in the pre-application round.
At either of these points, potential applicants with competing strings could decide to team up, trade horses, or do something else to prevent going into contention. (Of course, other companies that haven’t participated in Early Warning Report may apply for the same string, creating a contention set that isn’t apparent until after applications are revealed.)
Early Warning Report is the brainchild of Ray King, who applied for TLDs in the last round, and attorney Marc Trachtenberg. A neutral third party will be used to manage the submissions and string matches.
It’s a clever way to help applicants gain insight and potentially avoid costly string contentions, but it will only work if enough applicants participate. King told Domain Name Wire that it will only go forward if at least 200 strings are submitted.
This service allows potential applicants to “resolve the potential contention with other applicants before submitting an application”.
According to the FTC:
“Whenever business contracts are awarded by means of soliciting competitive bids, coordination among bidders undermines the bidding process and can be illegal. Bid rigging can take many forms, but one frequent form is when competitors agree in advance which firm will win the bid. For instance, competitors may agree to take turns being the low bidder, or sit out of a bidding round, or provide intentionally high bids to cover up a bid-rigging scheme. Other bid-rigging agreements involve subcontracting part of the main contract to the losing bidders, or forming a joint venture to submit a single bid. Individuals and companies that knowingly enter bid-rigging agreements are routinely investigated by the FBI and other federal law enforcement agencies and can be criminally prosecuted. Potential penalties include lengthy terms of imprisonment (up to ten years) and large fines (up to $1 million for individuals, $100 million for companies, or twice the gain or loss from the offense). Where appropriate, the FTC may also bring a civil enforcement action.”
John – thanks for the thoughtful input and for starting the discussion. We agree that this is actually a central issue and we are glad you raised it. To be clear our system just provides anonymous data to applicants and potential applicants enabling them to make more strategic decisions. This is critical considering the likelihood of contention for many strings, increased application fee of $227,000 and increased amount you lose on your application fee investment if you withdraw or lose an auction ($80,000 after reveal day and $180,000 at auction time).
The system also allows participants to potentially communicate with other applicants or potential applicants. But applicants or potential applicants might already do this by simply asking around or other means. Our system just provides more data points and makes the outreach process more efficient. At the end of the day, just like in the first round, it is up to each applicant to comply with the law and the ICANN rules during the application process which includes not engaging in bid-rigging or private resolution after Reveal Day. Our system doesn’t change that and the terms of use will require participants to comply with all applicable laws and the ICANN rules when using the system.