Payback time: The European Commission papers on ICANN

The most notable thing about the EC Papers on ICANN is that they are designed to completely subordinate ICANN as an institution. We have not seen such a comprehensive attack by a government on ICANN since the World Summit on the Information Society. One can infer that this is payback for the Board’s decision to not treat the EC's views, expressed in its Governmental Advisory Committee (GAC),  as binding instructions rather than as nonbinding advice.

Most of our readers will remember that the EC’s new GAC representative, Gerard de Graaf, embarrassed himself at the June Singapore meeting by pounding his fist on the table and demanding tha the Board immediately comply with policy changes he wanted. Many of the points he made, however, were badly reasoned and revealed ignorance of the issues involved. The Board was right to depart from his advice. De Graaf should know, moreover, that the ICANN Articles and bylaws clearly specify the nonbinding status of GAC advice. Indeed, many of the GAC demands would have constituted unilateral modifications of painstakingly negotiated compromises among multiple stakeholders. Yet while the EC clearly lost the argument, it has chosen to get vindictive rather than admit a mistake.

So now we have no less than six papers from the EC attacking almost every aspect of ICANN, from the growth in its staff to the new TLD program to its handling of ccTLDs. Moreover, the papers are clearly targeted at influencing the US government’s redraft of the IANA contract in ways that would be deeply unhealthy. While ICANN could certainly use some reforms, this set of attacks is just a destructive act of revenge rather than a good-faith effort to reform the organization or improve its policies.

To support that assertion, IGP blog will go through the EC papers one by one, and show what a flimsy pretext they provide for what is, in reality, nothing more than an attempt by an intergovernmental entity to punish ICANN for not bowing to it.

Today, we handle Paper 1 on “Applicable Law.” Paper 1 continues de Graaf’s ill-informed attack on
ICANN’s decision to permit new registries to own or operate their own registrars. The original EC correspondence shows that the EC was ignorant of the actual policy it purported to criticize. Its correspondence overlooks the fact that ICANN’s proposed policy would include a market power review, and allows for referral to antitrust authorities to make a market power determination. But there is a more fundamental flaw in Paper 1. Its underlying premise is that if ICANN chooses a policy that differs from that recommended by an EC official, then somehow it is “disregarding applicable national law.” This premise is false. ICANN’s decision to adopt a different (and actually more pro-competitive) policy toward registry-registrar cross ownership does not in any way pre-empt or preclude the application of other national laws. Regardless of what ICANN decides, national authorities and transnational governmental authorities such as the EU are able to apply their laws to domain name registries and registrars who operate in their jurisdiction, if they can prove that the results of vertical integration are anti-competitive. Just as the EC has brought or threatened antitrust cases against American companies such as Intel, Microsoft or Apple, so the EC could bring antitrust cases against any domain name registrar or registry with a significant business presence in Europe if they felt that consumers were being harmed through abuses of market power. The difference, of course, is that such actions would have to follow well-specified law and procedure, and the governments would have to prove their case, not just make assertions. So this is really a dispute about policy, not about applicable law. And by the way, as a global authority ICANN cannot possibly be a surrogate for 200 different national antitrust laws.

Incensed that ICANN did not suspend its long policy development process because of a few pages of superficial and uninformed speculation about the effects of cross ownership, the EC in Paper 1 complains about “the limited possibilities that ICANN stakeholders, including governments and public authorities, have to contest ICANN Board decisions if they feel they are inconsistent with either ICANN's own by-laws or applicable law.” Paper 1 calls for “some form of independent review mechanism.” What a joke this is.

First, ICANN already has an independent review process (IRP); whoever wrote EC Paper 1 apparently doesn’t know this. The existing IRP is too expensive and limited, of course. But the EC is not making a good faith argument about the need for stronger accountability, it is just trying to lash back at ICANN because it didn’t get its way. We know that to be the case because the EC has tried to circumvent ICANN’s IRP. In 2009, a distinguished international review panel decided that ICANN failed to follow its bylaws and proper process in its decision to deny the .XXX application. So ICANN did the right thing and reversed its decision and approved the triple-X domain. But the EC, under the leadership of Neelie Kroes, asked the U.S. government to reverse that decision! Indeed, Kroes actually asked the US government to abuse its authority over root zone changes by arbitrarily refusing to enter .XXX into the root zone. How can anyone take the EC’s demand for accountability and independent review seriously when it has shown that it will seek to undermine or reverse an IRP when it doesn't get the result it wants?

So much for Paper 1. Available Monday: an analysis of Paper 2, wherein the EC demands arbitrary and unlawful censorship powers over new top level domain names.