[Comments-com-amendment-3-03jan20] Comments of Leap of Faith Financial Services Inc. Opposing Proposed Amendment 3 to the .COM Registry Agreement

[George Kirikos]

Submitted by: George Kirikos
Company: Leap of Faith Financial Services Inc.
Website: http://www.leap.com/
Date: February 14, 2020

We write to oppose the Proposed Amendment 3 to the .COM Registry
Agreement, as posted by ICANN at:

https://www.icann.org/public-comments/com-amendment-3-2020-01-03-en

1. As a preliminary matter, we note with approval and fully support
Reconsideration Request 19-2 filed by Namecheap, Inc. regarding the
.org contract renewal:

https://www.icann.org/resources/pages/reconsideration-19-2-namecheap-request-2019-07-22-en
https://www.icann.org/en/system/files/files/reconsideration-19-2-namecheap-request-redacted-12jul19-en.pdf

where Namecheap wrote:

"The ICANN org will decide whether to accept or reject public comment,
and will unliterally (sic) make its own decisions- even if that
ignores the public benefit or almost unanimous feedback to the
contrary, and is based upon conclusory statements not supported by
evidence. This shows that the public comment process is basically a
sham, and that ICANN org will do as it pleases in this and other
matters. It is a concern not only for the renewal of the .org and
other legacy TLD registry agreements being renewed in 2019, but an
even greater concern for the upcoming renewal of the .com registry
agreement- as well as other vital policy issues under consideration by
ICANN now and in the future." [p. 12]

These are strong but thoughtful words from a highly respected company
in the domain industry, whose views are shared by many, including
those who've already submitted comments in this current period and
who've explicitly noted ICANN's history of ignoring the public, e.g.

a) Arif Ali of Dechert LLP:

https://mm.icann.org/pipermail/comments-com-amendment-3-03jan20/attachments/20200213/2d94b832/2020.02.13-Commenton.COMPriceChanges-0001.pdf

"ICANN’s apparent disregard for public comments violates both its
Articles of Incorporation and Bylaws." (footnote 4, page 2)

and

b) Zak Muscovitch of the Internet Commerce Association:

https://mm.icann.org/pipermail/comments-com-amendment-3-03jan20/2020q1/000012.html

"We trust that you can appreciated (sic) that your request for Public
Comments must be viewed with considerable skepticism considering that
the last time that you requested feedback from the public on an
amendment to a registry agreement, public comment resulted in exactly
zero changes to the .org Registry Agreement despite near universal
opposition and condemnation from stakeholders. Your failure to pay
more than lip service to the multi-stakeholder model resulted in what
is now widely considered to be the ".Org Fiasco".  This has called
into question whether ICANN is actually capable of representing the
public interest."

One of the synonyms for the word sham is fraud, and it’s apparent now
that a fraud has been perpetrated on the public, namely ICANN
deceiving the public into believing that these comment periods are
legitimate opportunities for meaningful input. NameCheap's
reconsideration request wasn’t strictly limited to the .org renewal,
but directly called into question the legitimacy of all of ICANN’s
public comment periods for all of the policy issues now and in the
future. ICANN should not take their reconsideration request lightly,
but should instead call for a full public investigation with full
opportunity for the ICANN community to weigh in on this procedural
matter which is at the core of ICANN itself. Until such an
investigation has concluded, we call on ICANN to suspend all public
comments periods, in order to ensure the process integrity of all
policymaking. Of course, given ICANN’s comment process is a sham, this
comment itself will likely be ignored, but we place it on the public
record for posterity so that a higher authority will eventually hold
ICANN accountable. Our remaining comments are thus made “in protest”
given that the process itself is currently a sham, but we place them
again on the record so that fair-minded members of the public can
later scrutinize ICANN’s processes, and hold them accountable.

2. We support and endorse the great groundswell of opposition as
expressed in the thousands of thoughtful public comments opposed to
this proposed contractual amendment.

https://mm.icann.org/pipermail/comments-com-amendment-3-03jan20/2020q1/date.html

There are over 8,700 submissions published at the time of this
submission, compared with many ICANN comment periods which generate
fewer than 50 submissions.

3. It should be noted that in the past ICANN trumpeted *lower* fees as
one of its main achievements. For example, the testimony of ICANN
General Counsel and Secretary John Jeffrey:

https://www.govinfo.gov/content/pkg/CHRG-109hhrg30233/html/CHRG-109hhrg30233.htm

"STATEMENT OF JOHN JEFFREY, INTERNET CORPORATION FOR ASSIGNED NAMES
AND NUMBERS (ICANN)
…
Among ICANN’s main achievements are the following:
…
Market competition. Market competition for generic top-level domain
registrations established by ICANN has lowered domain name cost in
some instances as much as 80 percent with savings for both consumers
and businesses."

It is not consistent with those past statements for ICANN to abrogate
its responsibilities, and permit unjustified fee increases by registry
operators. Unjustified fee increases are not in the public interest,
and do not balance the needs of registrants against those of registry
operators. ICANN was handed a responsibility to balance the interest
of affected stakeholders when it achieved (against our wishes)
independence from US government oversight, and it's now clear that it
is not living up to those commitments given such one-sided contracts
that have been presented here for public comment. Unjustified fee
increases are not balanced, and do not promote stability of the
internet or competition. ICANN is engaging in corporate welfare and/or
crony capitalism through such anti-competitive proposals.

4. Under competition the fees for providing registry services (really
just the management of a central database plus the operation of
various nameservers) would be under USD $1.00 per domain name per
year. This is evidenced by the .IN (India ccTLD) tender,

http://domainincite.com/23364-afilias-sues-india-to-block-12-million-neustar-back-end-deal

where Neustar beat Afilias with a winning bid of USD $0.70 per domain
name per year (70 cents/domain/yr).

A similar competitive tender process happened in France,

https://www.thedomains.com/2012/08/07/afnic-awarded-new-contract-to-run-fr-registry-but-only-after-open-bidding-results-in-reduced-prices/

where AFNIC had to lower the wholesale fees for .FR domain names, and
the contract was for 5 years.

Similar competitions are held for the .US ccTLD.

https://www.ntia.doc.gov/legacy/ntiahome/press/2007/Neustar_101907.html

You’ll note that registry operators do not have presumptive renewal in
those ccTLD contracts, yet are more than willing and able to compete
effectively and make investments. It was a major policy blunder of
ICANN to have agreed in the past to presumptive renewal, a decision
that has had a multi-billion dollar negative impact upon registrants,
compared to a situation where there are regular competitive tenders.
Even the US government has argued for those competitive tenders for
both initial agreements and for renewals of agreements

https://www.ntia.doc.gov/files/ntia/publications/icann_081218.pdf

(Ms. Garza’s analysis begins on the 3rd page of the PDF, after the
covering letter by Ms. Baker of the NTIA).

Verisign is currently permitted to charge a fee of USD $7.85 per
domain per year, far above what it would be under a competitive tender
process. This fact should be the starting point when consideration any
alteration to the status quo. A good faith negotiation *must* take
this fact into account, but it appears that ICANN did not at all take
this into account while conducting its negotiations with Verisign.
ICANN conducted no RFP or other means of gauging the ability or
willingness of others to take over the .COM contract. It conducted
none of its own economic studies. Those would have served the public
interest, but are absent.

The starting point of any good negotiation is to be aware of one's
BATNA -- "best alternative to a negotiated agreement". ICANN should
disclose what its BATNA was in this negotiation. This disclosure, when
compared to the current proposal, will demonstrate how poorly ICANN
represented the public in this negotiation.

5. ICANN claims that it is "not a price regulator and will defer to
the expertise of relevant competition authorities. As such, ICANN has
long-deferred to the DOC and the United States Department of Justice
(DOJ) for the regulation of pricing for .COM registry services."

ICANN directly references Amendment 35 of the Cooperative Agreement:

https://www.ntia.doc.gov/page/verisign-cooperative-agreement
https://www.ntia.doc.gov/files/ntia/publications/amendment_35.pdf

However, that amendment took place without any public consultation by
the Department of Commerce and without any opportunity for the public
to provide their own input and research. Furthermore, the precise
language of paragraph 2.a) of that amendment, with regards to pricing,
says:

"Without further approval by the Department, at any time following the
Effective Date of this Amendment 35, Verisign and ICANN ****may****
agree to amend Section 7.3(d)(i) (Maximum Price) of the .com Registry
Agreement to......" (emphasis added)

The exact language says "may", and not "must". "May" has a precise and
unambiguous meaning, as per RFC 2119:

https://tools.ietf.org/html/rfc2119

"5. MAY This word, or the adjective "OPTIONAL", mean that an item is
truly optional.  One vendor may choose to include the item because a
particular marketplace requires it or because the vendor feels that it
enhances the product while another vendor may omit the same item. An
implementation which does not include a particular option MUST be
prepared to interoperate with another implementation which does
include the option, though perhaps with reduced functionality. In the
same vein an implementation which does include a particular option
MUST be prepared to interoperate with another implementation which
does not include the option (except, of course, for the feature the
option provides.)"

Nothing in Amendment 35 *requires* ICANN to adopt that OPTIONAL
pricing scheme, but rather that's the *maximum* Verisign can seek.
ICANN is certainly within its powers to reject that maximum request,
which it must do if it's to balance the interests of all affected
stakeholders.

In a good faith attempt at a renegotiation of that clause, ICANN's
starting position should have been a 91%+ reduction in fees, to $0.70
per domain name per year (as per the .IN ccTLD tender). Verisign would
be free to ask for an increase. If the two parties were unable to
agree, then the status quo would remain, with fees capped at the
current $7.85 per domain name per year. If Verisign was unhappy with
$7.85 per domain name per year, they could certainly terminate the
contract, which would then be allowed to go to tender to a successor
registry operator (there'd be many who would relish the opportunity,
even at $1 or $2 per domain per year).

Furthermore, a regular tender process is entirely consistent with not
being a price regulator, as it would be the competitive market itself
(lowest bidder, subject to meeting a SLA) that dictates the price,
rather than ICANN itself setting a price. But ICANN refuses to engage
in that regular tender process, suggesting they would rather have
higher fees for registrants, entirely consistent with the regulatory
capture by the current registry operators who would most directly
benefit financially from those higher fees.

6. It is important to note that Amendment 35 did not alter paragraph
3(a) of Amendment 32 to the Cooperative Agreement:

https://www.ntia.doc.gov/files/ntia/publications/amendment_32_11292012.pdf

"(a) At any time after the Effective Date of this Amendment 32,
Verisign shall be entitled to seek removal of the pricing restrictions
set forth in Section 7.3 of the .com Registry Agreement attached
hereto if it demonstrates to the Department that market conditions no
longer warrant such restrictions. Verisign shall be deemed to have
made such a showing upon demonstrating that competition from other top
level domains, use of alternative Internet navigation techniques
(including search engines, browsers and URL shorteners, among others),
reduced demand for domain names, or other factors ****are sufficient
to constrain Verisign's pricing of Registry Services at the current
Maximum Price.****" (emphasis added)

Amendments 33 and 34 similarly did not alter or affect paragraph 3(a)
of Amendment 32. Indeed, paragraph 4(b)(i) of Amendment 35 explicitly
recognizes the continuation of paragraph 3(a):

"4(b)The parties agree that the following terms are the sole terms in
the .com Registry Agreement that require the prior written approval of
the Department:
i. Removal of the Maximum Price restriction under Section 7.3(d)(i)
(Maximum Price) of the .com Registry Agreement, which by way of
clarification *****will continue to be subject to Section 3(a) of
Amendment 32***** setting forth the standard and process for removal;
"

It's clear that the intention of paragraph 3(a)  of Amendment 32 is to
only allow pricing caps to change if Verisign was effectively
**constrained** by market forces to the *current* Maximum Price.
However, we know Verisign is not constrained, but instead has market
power (of a monopolist) to raise fees. Verisign is certainly not going
to lower their fees (which they could do already, under the current
agreement). Verisign seeks to amend the .com agreement only to raise
fees.

Indeed, if the current proposal before us is adopted, which allows for
guaranteed fee increases, when would Verisign rationally pursue its
right under paragraph 3(a) of Amendment 32? The answer is obviously
"never", because if it did exercise that right, its future fee
increases would be forever eliminated, constrained (by competition) to
the then current Maximum Price.

7. ICANN staff are clearly trying to mislead the public, when they
claim that "the devil made them do it", i.e. that they *had* to accede
to Verisign's demands because the Department of Commerce forced their
hand. That is not so. ICANN is attempting to shift the blame to others
when they themselves are at fault. ICANN could have completely
discharged their contractual obligations by entering into a good faith
negotiation that resulted in no agreement at all, because Verisign
refused to accept a $0.70/domain/yr fee (the result under a
competitive tender) proposed by ICANN, and ICANN refused to accept
unjustifiable price increases proposed by Verisign.

ICANN itself certainly doesn't believe that they had to accede to
Verisign's demands, otherwise how can they justify the $20 million
payment? There is absolutely nothing in Amendment 35 that says
Verisign shall pay $20 million to ICANN. Where did that number come
from? Why isn't that number $2 million? Or $200 million? Or $2
billion? The presence of that $20 million is a "smoking gun", which
betrays and undermines ICANN's false narrative that they were
compelled to accede to Verisign's pricing demands due to Amendment 35.

Instead, the $20 million is direct evidence of a "quid pro quo", in
exchange for Verisign getting a multi-billion dollar financial
windfall. Antitrust authorities should be investigating this
regulatory capture by Verisign, where they clearly have control over
the decision-makers who are not negotiating in the public interest.

If ICANN was honest about being compelled to make these changes, they
would have made the ***minimal*** amount of changes needed. We need
only see that precedent via Amendment 34 to the Cooperative
Agreement, which was adopted *verbatim* by ICANN as FIRST AMENDMENT TO
.COM REGISTRY AGREEMENT:

https://www.ntia.doc.gov/files/ntia/publications/amendment_34.pdf
https://www.icann.org/sites/default/files/tlds/com/com-amend-1-pdf-20oct16-en.pdf

But, ICANN is being dishonest, because nothing in Amendment 35 talks
about the $20 million. ICANN is saying one thing in public (that they
were forced into this deal), but another thing in private to Verisign
(that they want Verisign to give them things not enumerated in
Amendment 35, in exchange for the fee increases).

That dishonesty alone by ICANN should disqualify them from being
involved in this contractual negotiation, or having any trusted role
as a steward of the domain name system. ICANN is lying to the public,
because they are trying to "sell" this bad deal, pretending that it's
in the public interest. ICANN's interests are not aligned with that of
the public, but rather ICANN is aligning themselves with Verisign, as
Verisign has fully captured their regulator.

8. A good faith negotiation would have extracted far greater
concessions than $20 million from Verisign, in exchange for the
proposed fee increases (which are worth billions of dollars to
Verisign). It's clear that this was a bad faith negotiation, otherwise
there would have been either no fee increases at all, or much greater
concessions from Verisign.

9. Verisign's own negotiating position demonstrates that they too
believe that ICANN has the power to reject fee increases. Otherwise,
why would they voluntarily agree to flush $20 million down the toilet?
That $20 million is there for a reason --- it *had* to be there, from
their perspective, otherwise there'd be no deal. That tells us that
Verisign *knows* that ICANN could refuse the fee increases, that the
term "may" is not the same as the term "must".

Given the choice of no deal, or this bad deal, then the best choice
for the public interest is obvious --- there should be no change at
all to the status quo.

10. ICANN and Verisign have not even fully and properly adopted the
complete terms of Amendment 35. For example, the preamble says that:

"WHEREAS, the parties agree that Verisign shall continue to operate
the .com registry in a content neutral manner and will participate in
ICANN processes that promote the development of content neutral
policies for the operation of the Domain Name System (DNS);" (emphasis
added)

Paragraph 1 then makes it even more explicit:

"1.  Content Neutral Operations. The parties agree that Verisign will
operate the .com registry in a content neutral manner and that
Verisign will participate in ICANN processes that promote the
development of content neutral policies for the operation of the DNS.
"

You'll note the phrasing used by was "will" (i.e. equivalent to
"must"), not "may" for the content neutrality portion of Amendment 35.

Where is the language in the proposed .COM amendment that refers to
"content neutrality" or "content neutral policies"? [the words
"neutral" or "neutrality" don't appear in the documents!]

"Content neutrality" is directly related to free speech:

https://www.mtsu.edu/first-amendment/article/937/content-neutral

"Content neutral refers to laws that apply to all expression without
regard to the substance or message of the expression.

Such laws generally regulate only the time, place, and manner of
speech in contrast to content-based laws, which regulate speech based
on content. This distinction is important in First Amendment cases
because courts hold content-based laws to strict scrutiny — the
highest form of judicial review — while holding content-neutral laws
only to intermediate, or mid-level, scrutiny."

It's clear that Verisign (and ICANN itself) has no respect whatsoever
for free speech, given that I personally have been banned from
participating in all ICANN GNSO Working Groups, disregarding and in
violation of my free speech rights.

https://freespeech.com/2019/04/05/update-my-participation-rights-have-now-been-eliminated-at-icann-working-groups/

and it was Mr. Keith Drazek of Verisign (as chair of GNSO Council) who
sent the above letter. Mr. Philip S. Corwin of Verisign also played a
role in that debacle, as documented on the FreeSpeech.com website.

Under questioning by Ted Cruz, current CEO of ICANN Goran Marby did
not defend free speech or the first amendment, see:

https://www.cruz.senate.gov/?p=press_release&id=2811
https://youtu.be/1hI0SNCLaO8?t=430

Sen. Cruz to Mr. Marby: “Is ICANN bound by the First Amendment?”

Mr. Marby: “To my understanding, no.”

(see 7:10 into video for the start of that segment)

Where is there any language in this Proposed Amendment 3 from ICANN
that compels Verisign and/or ICANN to respect free speech and content
neutrality, and "to participate in ICANN processes that promote the
development of content neutral policies for the operation of the
Domain Name System (DNS);" It's not there. Instead, by its absence,
ICANN and Verisign make a mockery of free speech by perpetuating my
continued banishment from participating in ICANN GNSO and DNS
policymaking working groups.

Consistent with their ongoing disrespect for free speech, ICANN and
Verisign have not even attempted to implement the content neutrality
provisions of Amendment 35.

11. We also object to the major changes to the .COM Registry-Registrar
Agreement (starting from page 47 of
https://www.icann.org/sites/default/files/tlds/com/com-proposed-amend-3-03jan20-en.pdf
for those who didn't read that far!). Without mentioning all sections
(we object to all the changes, out of an abundance of caution), we
point out that the new language in section 2.7 is dangerous,
potentially allowing Verisign the ability to override decisions by
registrars as to how to handle various situations, which can result in
elimination of due process for registrants. For example, 2.7(b) refers
to:

"any legal order or subpoena of ****any government*****,
administrative or governmental authority, or court of competent
jurisdiction," (emphasis added)

which is not acceptable! For example, if this language is not
modified, then it says that if a government from Cuba, North Korea,
Iran or other totalitarian regime tells Verisign to transfer ownership
of sites owned by my company, such as Math.com or FreeSpeech.com to
their control, Verisign can go along! Or, why stop there? Why not
allow Verisign to shut down Google.com, if the government of Iran or
Turkey or Russia asks for it? Why bother with a shutdown -- suppose a
government in one of those regimes orders the actual transfer of a
domain name such as Google.com or Sex.com or School.com or Apple.com
or Amazon.com or Microsoft.com?

Again, why stop there? A "crafty" government seeking to profit
economically, say in a banana republic, can pass a law to say that
they want all dictionary-word dot-coms, 2-letter and 3-letter dot-coms
and other valuable domain names to be transferred to them! That's many
billions of dollars worth of digital assets, all for the taking --- if
those banana republics can sell passports, citizenship, their entire
ccTLDs, and engage in other dubious activities, why wouldn't they be
incentivized to simply pass laws to order the transfer of an $872
million domain like Cars.com?

https://www.godaddy.com/garage/the-top-20-most-expensive-domain-names/
https://www.dnacademy.com/the-definitive-guide-to-the-worlds-largest-domain-sale

This is unacceptable. Registrants have an expectation that they will
be governed by the laws of the jurisdictions in which they are based
(or that of the registrar), and due process considerations demand that
this continues.

All of the changes to section 2.7(b) should be eliminated. For
example, why single out "copyright infringement" -- why not criminal
activity by banks such as Barclays?

http://www.circleid.com/posts/20150520_should_barclays_lose_the_barclays_top_level_domain/

Or patent violations by Apple?

https://www.theverge.com/2020/1/29/21114325/apple-broadcom-caltech-lawsuit-jury-award-1-1-billion-damages

Even Google has an active case involving alleged copyright
infringements with Oracle:

https://en.wikipedia.org/wiki/Google_v._Oracle_America

If Google loses that case (now before the Supreme Court), why
shouldn't they lose all of their domains, under the literal
interpretation of the proposed Section 2.7(b)? It's clear to us that
Section 2.7(b) is dangerous because it would only be selectively
enforced. I doubt Google or Youtube has much to fear from Verisign,
despite all the copyright infringement that takes place on their
domains. But, by the strict language of that contract, conceivably
they *should* be afraid. Instead, it'll be more vulnerable entities
who would lose their domains, without proper due process. No one
should have that power, except proper courts (in the proper
jurisdictions, not "any jurisdiction").  Contracts should be read as
to what's possible, and what's proposed here is potentially extremely
dangerous.

12. The new language in Section 2.14 reinforces 2.7(b), and also must
be eliminated, for the reasons above.

13. The new language in Section 6.3 of "Force Majeure" is also highly
objectionable, and must be removed. In particular, force majeure would
begin to apply to " cyberattack, to protect against imminent and
substantial threats to the security and stability of the Registry TLD,
System, Verisign’s name server operations or the internet".

Verisign often attempts to justify its high fees by saying that it has
to pay for defending against DDOS attacks (i.e. cyberattacks). It
would incentivize Verisign to reduce its security costs and SLA
standards if it can then simply rely on declaring "force majeure" for
any attack that takes it down. Verisign has one main job, and one job
alone, namely 100% uptime.

Verisign and ICANN are inconsistent when they say they want  "to
preserve and enhance the security and stability of the Internet or the
TLD” but at the same time add new language in the "force majeure"
section that detracts from and reduces security and stability, and
which says less than 100% uptime is acceptable. SSAC should have
spoken out immediately about this new language, but perhaps SSAC
members are too busy drooling at the thought that $20 million might
come their way in one form or another, as the LOI says:

https://www.icann.org/sites/default/files/tlds/com/com-proposed-loi-03jan20-en.pdf

"convene subject matter experts within ICANN, the ICANN community and
Verisign to meet monthly, or more frequently as appropriate, to work
to effectuate the items described in Section 1(A)(i-iii) above."

Who are the "subject matter experts within ICANN"? Probably some will
come from the SSAC, which will now be in a conflict of interest, as
they are not willing to bite the hand that feeds them by speaking out
against this bad deal.

14. We object to the language in the Public Interest Commitments (page
68 of the PDF https://www.icann.org/sites/default/files/tlds/com/com-proposed-amend-3-03jan20-en.pdf
) for the same reasons as discussed above in point 11 of this comment,
namely the potential loss of due process rights for registrants.

15. We object to the proposed "Letter of Intent", in its entirety:

https://www.icann.org/sites/default/files/tlds/com/com-proposed-loi-03jan20-en.pdf

Verisign does not have a great "history of stewardship" --- remember
SiteFinder and the ensuing litigation? (as noted by other commenters)
They should not be equal partners with ICANN or have any superior
position to any other stakeholder in deciding future binding policies.
The Letter of Intent was a "quid pro quo", as noted earlier.

16. This proposal by ICANN staff and Verisign demonstrates everything
that is wrong with ICANN. A brand new negotiation is required. The
starting point should be a list of the absolute minimum set of changes
required by the Cooperative Agreement, if any. As noted above, the
"may" language, combined with the presence of the quid pro quo,
implies that the "absolute minimal changes" are different than what
has been presented to us for consideration. Indeed, one alternative is
to simply refuse ALL changes, and let Verisign go to court, if they so
desire, to have the courts interpret what is required and what is
optional. No deal is better than this deal. Any court-ordered set of
the absolute minimally-required contractual changes would likely be
far better for the public than what has been presented to us.

17. As there is no immediate deadline (I believe October or November
2020 is the most relevant date for completing a "negotiation"), ICANN
should hold a series of public webinars with Questions and Answers
from the public and its important stakeholders. This is the most
important contract, financially for ICANN, for registrars, and for
registrants. It deserves the greatest scrutiny.

Sincerely,

George Kirikos
President
Leap of Faith Financial Services Inc.
http://www.leap.com/