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

[Hickson, Nigel (DSIT)]

Sam and colleagues

Good evening.  Well; we in the GAC just put our finger in the air, had another drink and then wrote this......(smile)

Instead, we had an extended dialogue with ALAC, including an expert they worked with, discussions with GNSO, the Board and others.

Not pretending this is easy, or that it could never be circumventing.

Best

Nigel



From: SubPro-IRT <subpro-irt-bounces at icann.org> On Behalf Of Sam Lanfranco
Sent: Thursday, June 20, 2024 7:20 PM
To: subpro-irt at icann.org
Subject: [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions

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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