[Gnso-newgtld-wg] Notes and Action Items - New gTLD Subsequent Procedures PDP WG - 02 December 2019

Julie Hedlund julie.hedlund at icann.org
Wed Dec 11 16:26:35 UTC 2019

Hi Paul,

Just confirming that we’ve received your helpful email on the SubPro WG email distribution list.

Kind regards,

From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces at icann.org> on behalf of "McGrady, Paul D." <PMcGrady at taftlaw.com>
Date: Tuesday, December 10, 2019 at 5:25 PM
To: Justine Chew <justine.chew at gmail.com>, "Austin, Donna" <Donna.Austin at team.neustar>
Cc: "gnso-newgtld-wg at icann.org" <gnso-newgtld-wg at icann.org>
Subject: Re: [Gnso-newgtld-wg] Notes and Action Items - New gTLD Subsequent Procedures PDP WG - 02 December 2019

Hi All!

I have really enjoyed the conversation on the calls and on this list regarding auctions.  It is a great reminder of how rich in talent our community is.

Below I have summarized some of the pros and cons of each process discussed (these are not meant to be exhaustive or dismissive, just my own thoughts which I encourage others to supplement).  I’ve also proposed a possible way forward that could disrupt the current default status quo (ICANN Last Resort auction found in 2012 AGB, but which in my opinion is based on the false premise that ICANN “owns” all the undelegated gTLD space) but not force everyone into a one-sized-fits-all solution.  I hope that the below encourages communication and helps us reach a consensus position that everyone in the WG can stand behind.

Auction Type



Vickrey (place maximum bid amount at the time application is filed)

  *   Straightforward.
  *   Eliminates significant delays caused by contention sets.

  *   Favors single TLD applicants.
  *   Favors deep pockets.
  *   Bad for .brand applicants who could end up paying significantly more
  *   Enriches ICANN (which has never justified why it thinks it “owns” the undelegated TLD resource).

Modified Vickrey (place maximum bid amount at the time contention sets are formed)

  *   Straightforward.
  *   Eliminates much of the delay caused by contention sets
  *   Eliminates ICANN Last Resort auctions.
  *   Allows multiple TLD applicants to use resources more efficiently.

  *   Favors deep pockets.
  *   Enriches ICANN (which has never justified why it thinks it “owns” the undelegated TLD resource).

Private Resolution (could be dollar amounts, acquisitions, other consideration, etc.)

  *   Allows for full creativity to resolve contention sets.
  *   Doesn’t enrich ICANN (which has never justified why it thinks it “owns” the undelegated TLD resource).
  *   The parties may agree on an auction process to resolve the contention set or they may agree instead to negotiate toward a mutually rewarding outcome.

  *   There have been rumors of gaming in the last round.
  *   Favors deep pockets.

ICANN Last Resort (status quo from 2012 AGB)


  *   Favors deep pockets.
  *   Enriches ICANN (which has never justified why it thinks it “owns” the undelegated TLD resource).

A possible way forward:

Choice.  Let each applicant choose how they would like to proceed.  If all of the other members in the contention set make the same choice, that is the method that will be used.  If, however, the members of the contention set do not agree, then ICANN Last Resort (status quo) will be default.  There is no harm to the pro-Vickrey applicants in this option since whatever dollar amount they designated in their applications can, if they so choose, become their maximum dollar amount in an ICANN Last Resort if need be.  Since an applicant submitting a Vickrey auction preference might be compromised in an ICANN Last Resort, the maximum dollar amount they are prepared to spend should be lodged with a third party under strict confidentiality obligations, e.g. with one of the large accounting firms.

The same is true for the pro-Modified Vickrey applicants.  Whatever maximum dollar amount that they would have bid once contention sets were finalized can become their maximum bid in an ICANN Last Resort if need be.

Likewise, if an applicants selected Private Resolution and the other member(s) of the contention set did not, they would simply bid in the ICANN Last Resort whatever they were prepared to pay in a private auction.

Because Private Resolution opens up the door to creative problem solving between members of a contention set, the applicants in that contention set should be allowed to select – after contention sets are formed – to try Private Resolution.  Such a selection should be unanimous and if it doesn’t lead to resolution (e.g. negotiations are attempted and fail instead of the parties using a private auction), then the ICANN Last Resort option would kick in.

I hope the above is helpful and moves us a bit closer to a consensus position.  Thanks.


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From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces at icann.org> On Behalf Of Justine Chew
Sent: Monday, December 9, 2019 6:49 PM
To: Austin, Donna <Donna.Austin at team.neustar>
Cc: gnso-newgtld-wg at icann.org
Subject: Re: [Gnso-newgtld-wg] Notes and Action Items - New gTLD Subsequent Procedures PDP WG - 02 December 2019

Thank you, Donna, for picking this up.

Just in relation to Goal No. 1, on reflection, I think the text "...in which the winner ultimately overpays for the TLD" should be omitted or reworded, firstly as Donna has explained, we don't know what "overpays" actually means. Secondly, even if that is the case, why should we be concerned if an applicant chooses to "overpay". Thirdly, At-Large's concerns had to do with the situation of wealthier applicants outbidding less-wealthy applicants, thereby potentially stifling competition.

So, perhaps the goal should be re-stated as "Reduce the risk of unintended outcomes from “bidding wars".

As for the remaining texts, I would like to be able to review the flowcharts for the 3 Alternatives before making further comments.


Justine Chew

On Sat, 7 Dec 2019 at 04:57, Austin, Donna via Gnso-newgtld-wg <gnso-newgtld-wg at icann.org<mailto:gnso-newgtld-wg at icann.org>> wrote:
Thanks for the notes Julie, these are particularly helpful as I wasn’t able to attend the call.

I have listened to the recording and I wanted to address a couple of issues that were discussed and are captured in your notes.

I don’t agree that Alternative 1 addresses the following goal:

  1.  Reduce the risk of “bidding wars” in which the winner ultimately overpays for the TLD.
a.                Tentative, related goal for discussion: encourage applicants to bid their true value for a TLD.

I personally struggle with this as a goal because it’s a subjective assessment that applicants from 2012 overpaid for a TLD. Only the successful applicant can make that judgement and if the applicant willingly entered into a private or ICANN auction of last resort they didn’t do so blindly: they had an opportunity to assess the market and combined with their own personal objectives for wanting a string made a judgement about how much they were willing to pay for the string.

As I noted previously, my main issue with Alternative 1 is that the sealed bid has to be provided at the time of application, which is unfair to any applicant that ultimately finds themselves in a contention set. No-one can predict how many applications will be received and how many strings will end up in a contention set so the applicant has no information available at the time of submitting their application on which to assess the value of the TLD to them.

It would be eminently fairer to all applicants to submit sealed bids at a time when more information is available that would allow them to make a more informed decision about the value of the TLD to them, which is ultimately why I proposed Alternative 2 originally.

Donna Austin
Neustar, Inc. / Senior Policy Manager, Registry Solutions
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From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces at icann.org<mailto:gnso-newgtld-wg-bounces at icann.org>] On Behalf Of Julie Hedlund
Sent: Monday, December 02, 2019 8:52 AM
To: gnso-newgtld-wg at icann.org<mailto:gnso-newgtld-wg at icann.org>
Subject: [Gnso-newgtld-wg] Notes and Action Items - New gTLD Subsequent Procedures PDP WG - 02 December 2019

Dear Working Group members,

Please see below the notes from the meeting on 02 December 2019. These high-level notes are designed to help WG members navigate through the content of the call and are not a substitute for the recording, transcript, or the chat, which will be posted at: https://community.icann.org/display/NGSPP/2019-12-02+New+gTLD+Subsequent+Procedures+PDP<https://urldefense.proofpoint.com/v2/url?u=https-3A__community.icann.org_display_NGSPP_2019-2D12-2D02-2BNew-2BgTLD-2BSubsequent-2BProcedures-2BPDP&d=DwMGaQ&c=MOptNlVtIETeDALC_lULrw&r=CwipU91YB6EkpFXK9ynnT_QUef4yC5p7jpsDm8cU97g&m=JoTKufMJCg61DXDXCrwRY_MAaLTb_ZSrDH7Fzgwjrls&s=_51UB1f5GcK4eSMvs-LveU9QVE2_2nruA-sSl33kYfs&e=>.

Kind regards,
Julie Hedlund, Policy Director

Notes and Action Items:


ACTION ITEM 1: Add a third alternative.
ACTION ITEM 2: Add another goal (#7): “Increase efficiencies in application evaluation by way of understanding the contention set?”
ACTION ITEM 3: Create a flow chart with a fictional string to show how alternative 1 would work.
ACTION ITEM 4: Update the list of goals.


1. Review Agenda/Statements of Interest: Susan Payne was reappointed IPC Secretary for another year.

2. String Contention Mechanisms of Last Resort: https://docs.google.com/document/d/16qDoiK6vydQp6a0v9tMvU2l5fcypJY24hCzTIVTjKwk/edit?usp=sharing [docs.google.com]<https://urldefense.proofpoint.com/v2/url?u=https-3A__docs.google.com_document_d_16qDoiK6vydQp6a0v9tMvU2l5fcypJY24hCzTIVTjKwk_edit-3Fusp-3Dsharing&d=DwMGaQ&c=FmY1u3PJp6wrcrwll3mSVzgfkbPSS6sJms7xcl4I5cM&r=adDIs0WEx_lLwFfrsdovxTYY8GkRHo5ibc8SR3Npdh8&m=CQEth_7agzL4nstv-7WTuaAuI6d1I-2inhjqcYiT46I&s=A3JYJRT5C06hqUQZ-Zi8neK99f2OkoiaMb6s-dNpcAk&e=>

What is the issue we are trying to address:
-- The Working Group has discussed a number of potential issues with the mechanisms of last resort used in the 2012 New gTLD Round. These issues are captured in the Supplemental Initial Report.
-- Although the Working Group ultimately believes that when there is string contention, an auction process should be used to select the Registry Operator invited to enter into a Registry Agreement with ICANN, the Working Group is still discussing what forms of private resolution should be allowed (if any), the specific type of auction to be used, and the timing of such an auction.

Policy Goals / What the WG is Seeking to Accomplish:
-- The WG is largely supportive of existing Implementation Guideline F:
Implementation Guideline F: If there is contention for strings, applicants may:
i) resolve contention between them within a pre-established timeframe
ii) if there is no mutual agreement, a claim to support a community by one party will be a reason to award priority to that application. If there is no such claim, and no mutual agreement a process will be put in place to enable efficient resolution of contention and;
iii) the ICANN Board may be used to make a final decision, using advice from staff and expert panels.

Other goals include:

  1.  Reduce the risk of “bidding wars” in which the winner ultimately overpays for the TLD.

     *   Tentative, related goal for discussion: encourage applicants to bid their true value for a TLD.

  1.  Reduce collusion, profiteering, and/or speculation, especially as it relates to financial transactions external to the program (Note, while this is not an explicit goal for the mechanisms of last resort, it has been discussed as a motivation for altering the auction mechanism).
  2.  Increase transparency.
  3.  Resolve contention more quickly.
  4.  Increase predictability.
  5.  Encourage new entrants into the field.
b.                Which could include, making it easier to implement “multipliers” for certain types of applicants, such as those eligible for Applicant Support.

-- Note that some of the terminology may need to be further defined if the above goals are adopted. In order to ensure that recommendations align with goals, it is important for the Working Group to agree on specific objectives.

-- Do we still need iii)? An alternative may be, "The ICANN Board may use expert panels to make Community Priority Evaluation determinations." This may also be dependent on recommendations on the new appeals mechanism.
-- ICANN Board says it does not make policy.  Its decision would be subject to RFR and IRP - very messy so it may be better to stick with what we developed earlier.
-- This isn’t about the Board making policy, but making it clear that it’s an auction process rather than the Board making a decision.
-- There should be a reference instead to Auction of last resort.
-- Agree they are good goals so suggest removing possible description
What are we Proposing?
-- The Working Group is leaning towards recommending a sealed-bid auction as the ultimate form of auction used as a mechanism to resolve string contention. When a sealed-bid auction is held where bids are submitted without knowing the bid of others in the auction (e.g., prior to evaluating any of the applications) it is also called a Vickrey Auction. A sealed-bid auction can also be used as a mechanism of last resort and at the end of the process.
-- With a sealed-bid auction, each applicant submits a sealed bid, stating the amount that they are willing to pay for the TLD. The ultimate “winner” pays the amount submitted by the second-highest bidder..
-- Regardless of when the sealed bid auction is held, if there are one or more Community-based Applications, that/those application(s) would need to be processed first through Community Priority Evaluation before looking at the auction bids.

Alternative 1 - Vickrey Auction (No Private Resolution)

-- Addresses goals 1, 2, 4, and 6.
-- The principle pro here is the seemingly near elimination of private resolution. However, the principle con is the substantial complications this approach introduces (see Additional Considerations, Mostly For Alternative 1 below). Other cons are that other forms of private resolution might be impacted (e.g., joint ventures, string change, etc.) in seeking to eliminate private resolution for financial benefit and that bids are submitted with no contextual information.

Alternative 2 - Sealed-Bid Auction allowing Private Resolution

-- It seems to be supportive of, or at least not impede, 1, 2, and 6, but in a less pronounced manner as it relates to Alternative 1; the maker of this Alternative has acknowledged that it does not fully address concerns around potential collusion and profiteering on application withdrawals.
-- However, some benefits are likely derived by obtaining sealed bids (which can reduce the incentive for all parties to agree to private resolution, if an applicant already knows they have the highest bid). The other main pro here is simplicity - most other processes remain unaffected.

-- Re: Alternative 2: First bullet point and third bullet point seem incompatible.  Third bullet point: “Applicants would still have an opportunity to resolve the contention set through other means such as private auction, a joint venture arrangement or to choose another string as was suggested for ‘brands’ of the same name.”
--  Assuming you stayed in only those applicants who stayed in would be revealed on reveal day.  So you could still have private resolution.
-- For clarity, the third bullet could be swapped with the fourth bullet and add “post reveal day”.  In third bullet point, after "opportunity", you would need to insert "after reveal day" or something to clarify that parties become known.
-- Question: Wasn’t one of the proposals to outlaw private auctions?  So not sure why we are still allowing private resolution.  Answer: If we went with alternative 1 we would eliminate private resolution, but not for alternative 2.  So that is one of the drawbacks with alternative 2.
-- Thought alternative 2 was to allow participants to know how many contention sets there are.  Add as a third alternative: Alternative three could remove some of the elements about private resolution.
-- They may not resolve privately and should only have a limited period to resolve.  If not resolved in a limited period, it should proceed to the sealed bid winner.  I am not seeing the time limit in alternative 2 though.  Is it there?
-- Question: How would the timing work with a string contention objection process?
-- How could private auctions be prevented?
-- Objections should not be triggered until a winner (or a private resolution winner) is identified.
-- Re: Alternative 2 there should be a limited time for private resolution.
-- Helpful to put these alternatives out for public comment and indicate whether the WG has a preference.
-- Re: Alternative 2 -- Question: For string confusion objections those would have to be heard right away.

Additional Considerations:

Public Comment: Comments from the public are solicited on all applications regardless of where they are placed in the queue. To do it otherwise would mean opening up separate public comment periods depending on whether there is a need to go to the second bidder, and that would be impossible to monitor.

-- Strongly support 1 public comment period, for the exact same length of time for all.
-- Impractical to have multiple public comments.

String Similarity Evaluation:

-- Don’t see how this fits with the notion of closed bids and timing.  You have a scenario where you have some who know who they are bidding against and everyone else doesn’t.
-- In the scenario where the result of a string similarity evaluation is that some would have insight into who is in the set -- this is an unfair result.
-- Which is why getting every applicant to submit a bid at the point of application is something to consider, even though it may be cumbersome for many.
-- What if this fact situation should default to sealed bid only?
-- Why would they not be all announced at the same time?
-- So we are proposing to treat some applicants differently from others? That does not seem to be in line with the Bylaws.
-- Wouldn’t alternative 1 solve this issue?
-- What about plurals?
-- There was only one case in 2012 that was found to be similar (unicorn/unicom).
-- Why string similarity evaluation after reveal day?  Why not make it before reveal day?  That is a possibility.
-- is string similarity not subject to accountability mechanisms and appeals?
would that not “reveal” it in some manner?
-- Agree with that suggestion re string similarity evaluation occurring first and before reveal day.  bids would have to be in before appeal.

Objections: Objections on the highest bidder’s application must be filed within the objection period. With respect to objections to the other applications, ICANN would create a system for the filing of “an intent to file an objection.”

-- Question: What happens when someone indicates that they are filing a community objection and they are filing it against all of the applicants for a string.  Answer: All applicants should have a chance to respond.  Add text to relay your comment on "can indicate that an objection will apply to all applications for same string"?

-- Objections should not come into full proceedings unless and until there is a winner - it's a huge waste of time and money if it does proceed but private parties need to know what the value of the string may be.
-- Some concern about not having to submit the objections on a standard timeline, although support not engaging fees or panels until the objection is necessary, based on bidder ordering
-- “time” may benefit some as they build their case.  Or could the “intent to file” require some key points that will be included in the objection filing?
-- Question: We are agreeing on the principle that the intent to object is a good idea, but when would that happen?  Would one party have to state the type of objection and the grounds?  Could it just be a party filing very general intent to objection concerning a risk associated with that application.  Would there be a panel for an intent to object process? Answer: Proposal was that the objection would be “bare bones”.  There would be no panel if it was just an intent to object to one application, but if for all applications (to the string) then one could request a panel.  You file your objection against the applicant first in the queue and an intent to file against the others in the queue.  Or, you could say I have the same objection to all of the applicants/string.
-- Important for private parties in resolution to know that there is an intent to object (but that doesn’t pertain to alternative 1 as there is no private resolution).
-- The objection should be submitted within a certain time period.
-- The nature of the applicant is important.  It's not just the existence of the string.  It depends on who is operating it and what the purpose of the tld as stated in the application  in Question 18 answers and services to be provided in answer to Question 23.  There should be an intent to object process prior to determining the order of the queue with no panel convened.

Other complications:
Objections if there is more than one Community Application
String Confusion Objection Results in the Creation of a New Contention Set or Adds to an Existing Contention Set
Appeals/Accountability Mechanisms
Applicant Support Program

-- Seems that these are all related to the attempt to gain efficiencies to know the order of the contention sets.  If you don’t need to know the order then you could leave the program untouched.  If you go back to the goals knowing the order of the contention sets goes to goals 3, 4, and 5.
-- Add a goal: “Increase efficiencies in application evaluation by way of understanding the contention set?”
-- Note that alternative 1 would eliminate the goal to allow contention resolution.  “If there is contention for strings, applicants may: i) resolve contention between them within a pre-established timeframe”

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