It has now been confirmed that the two letters sent to the ICANN Board by antitrust authorities in the U.S. and Europe were a coordinated attempt by those government agencies to derail approval of new TLDs by the ICANN Board at the Singapore meeting. One GAC member referred to it, only half-jokingly, as a “plot.” Assistant Secretary of Commerce Lawrence Strickling and European Commissioner Nellie Kroes met about two weeks ago to discuss ICANN. The letters emerged from those meetings, as both asked their competition policy units to put together a hasty statements on the cross-ownership issue. The letters came out only only days before the meeting and were deliberately released on short notice to help stampede GAC members into supporting an ultimatum from the GAC asking the Board not to go ahead with new TLDs at this meeting. The GAC ultimatum, released yesterday, demands resolution of three major issues: competition concerns related to cross ownership, the requirement that trademark owners demonstrate use before availing themselves of new TLD sunrise protection mechanisms, and attempts by ICANN to ensure that GAC advice “contain particular information or take a specified form.”
Several governments, including Portugal and Italy, were not supportive of further delay but chose to defer to the strong push by the US and European Commission. The GAC statement, however, does not really represent a consensus of the world's governments; rather, it reflects the strong pressure of a few dominant members and the unwillingness of others to subject themselves to the political and personal pressures that would come from an attempt to mount a challenge to it.
On competition policy, neither the US nor the EC letters raise serious problems. The US letter, as noted in our last blog, simply asks the Board to review the market power of that small number of incumbent gTLDs who are regulated by price cap before allowing them to vertically integrate. It would actually be possible for the Board to do that under its proposed review procedures, which already allow for referral to antitrust authorities to make a market power determination. The EC letter basically reiterates the same position, and makes the same mistake: overlooking the fact that the proposed procedure would include a market power review. At best, the letters call for trivial adjustments in the proposed process and do not justify a major overhaul of the program. The EC letter also claims, somewhat hypocritically, that there is no consensus on this issue – that is true, but it also means that there is no consensus for remaining with the status quo. Indeed, the EC's call to separate resolving this policy issue from the new TLD program would destroy the viability of many new gTLD applicants, because they would be forced to adopt the old business model, which is not viable for many smaller, more focused TLDs.
