[SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions

[Sam Lanfranco]

I am not in favor of private auctions but I have yet to hear of a way to make prevention operational. 

What do the lawyers among us have to say here?

Sam L.

⁣Internet Elder, Internet Ecologist

On Jun 20, 2024, 3:07 p.m., at 3:07 p.m., trachtenbergm at gtlaw.com wrote:
>Personally,  I think that permitting private auctions in the next round
>will completely distort and destroy it as the majority of applications
>will be speculative in nature trying to get a payout via private
>auction.  We already know anecdotally that there are a number of people
>setting up funds to do this and many others have already publicly
>expressed an interest in doing this.  And certain strings are obvious
>targets.  This will junk up the process, waste ICANN resources, and
>increase time and cost for all applicants, and be detrimental to the
>general public.  Frankly, I don’t know anyone that thinks permitting
>private auctions is a good idea and will be beneficial other than those
>who have expressed interest in participating in them.
>
>Of course it is a different question of how to prohibit private
>auctions. I am not sure how this can be effectively accomplished. 
>Maybe we prohibit all private resolution of contention sets for
>monetary (or equivalent) consideration other than the ICANN  auction of
>last resort.  Could applicants still do this secretly – of course.  But
>if they wee found out, the winner could lose its TLD. If we all think
>that having private auctions is detrimental then we should take steps
>here to prohibit them, as ICANN is not doing so (although they have
>expressed concern) and have kicked it back to the GNSO.  Yes of course
>there will be ways to game any method we choose but the possibility of
>gaming is too often used in ICANN-land as a reason/excuse not to do
>things and to keep the status quo.  The reality is that any
>system/rule/process can be gamed and the best we can do is try to set
>up the process to reduce opportunities for gaming and increase
>penalties for doing so.
>
>Best regards,
>
>Marc H. Trachtenberg
>Shareholder
>Chair, Internet, Domain Name, e-Commerce and Social Media Practice
>Greenberg Traurig, LLP
>77 West Wacker Drive | Suite 3100 | Chicago, IL 60601
>T +1 312.456.1020
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>trac at gtlaw.com<mailto:trachtenbergm at gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/>
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>From: SubPro-IRT <subpro-irt-bounces at icann.org> On Behalf Of Sam
>Lanfranco
>Sent: Thursday, June 20, 2024 1:20 PM
>To: subpro-irt at icann.org
>Subject: [SubPro-IRT] GAC Advice on Private Auctions and ICANN
>Last-Resort Auctions
>
>*EXTERNAL TO GT*
>Comment by Sam Lanfranco
>I do not believe that the GAC understands the complexities in its
>advice with regard to not using auctions in the resolution of
>contention sets.
>FIRST: Once a contention set is determined, there is really no
>mechanism by which the contenders can work out a resolution on their
>own that can be prevented by ICANN. In a contention set an agreed
>payment scheme would avoid an auction, but an auction ban could not be
>enforced. Even insisting on an ICANN auction of last resort could not
>prevent a prior agreement between contending parties, and the ICANN
>auction would just a formality in terms of a private agreement.
>SECOND:  Auctions exist to solve a problem of excess demand for unique
>(non-fungible) commodities. A gTLD is a unique supply of one item, the
>thing being sought is right to be the registry for that one item
>(vertical supply line at Q = 1). Money as the numéraire in which the
>price is expressed and the auction as a way of selecting a buyer when
>there are competing interests are a “form follows function” solution to
>the competing interests. It was invented precisely for this purpose
>when there is no overriding reason to award the "item" (gTLD registry)
>to any one contender.
>GAC proposed no alternatives to resolving the contention set without an
>auction. Any alternative would require a consensus on an outside agent
>who would have neither regulatory guidelines not case law to reach a
>decision. That would mean that there are no objective criteria for
>selecting an outside agent.
>My view here would be to explain this to GAC, and politely ask if they
>have guidance on how an acceptable outside agent might be identified.
>In the end I see no way around an ICANN auction of last resort, even if
>there is a way of preventing a private resolution within the contenders
>in the contention set. This situation is precisely why humans with
>agency created auctions in the first place.
>Sam Lanfranco
>
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