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

Fri Jun 21 01:25:42 UTC 2024

This seems overcomplicated and I also don’t think removes the incentives.

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
M +1 773.677.3305
trac at gtlaw.com<mailto:trachtenbergm at gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/>  |  View GT Biography <https://www.gtlaw.com/en/professionals/t/trachtenberg-marc-h>

[Greenberg Traurig Logo]
[cid:image002.png at 01DAC350.04016050]

From: Jothan Frakes <jothan at jothan.com>
Sent: Thursday, June 20, 2024 3:27 PM
To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm at gtlaw.com>
Cc: samlanfranco at gmail.com; subpro-irt at icann.org
Subject: Re: [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions

I was considering, as we were al kvetching about the fees in another thread, that one concept that might be a creative method of isolating the contention set resolution _stuff_ might be to withhold any discounting refunds for the applications within those sets until the contention set is resolved, and isolate any fees associated with the remedy of the contention to being funded from that pool of moneys, isolated from the other applications.

Here is an illustration hypothetical example of how this might work:
Marc applies for .cryptoschmutz, I apply for .cryptoschmutz, and there are maybe eight others that apply for .cryptochmutz, for a population of 10 .cryptoschmutz TLD applications.

We all paid a higher application fee, based upon ICANN's prediction that there would only be 1000 applications, and ICANN receives a thundering herd more than that, say 3000, to where the fee is reduced and a portion is eligible to be refunded.  To keep it simple, let's use 50k as the refundable amount.

Because we were all in a contention set, the refunds would be withheld, and there would be a pool of 10x50k, 500k available to use as the contention set resolution funding pool to cover any costs associated with the .cryptoschmutz TLD.  Whatever occurs to narrow the pool of applicants to 1, any costs, legal or otherwise, are paid solely from that pool, and then 1/10 of any remainder is distributed to each applicant AFTER the contention set is addressed.  So, let's say it cost 50k to resolve, then there is 450k remaining and that gets distributed as 45k each to the applicants.

This could financially disincentivize intentionally joining a set, as you end up with stuck money, and the attraction of being refunded could be an incentive for more applicants rapidly arriving at contention set resolutions.

-Jothan

Jothan Frakes
Tel: +1.206-355-0230

On Thu, Jun 20, 2024 at 12:08 PM trachtenbergm--- via SubPro-IRT <subpro-irt at icann.org<mailto:subpro-irt at icann.org>> 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
M +1 773.677.3305
trac at gtlaw.com<mailto:trachtenbergm at gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/>  |  View GT Biography <https://www.gtlaw.com/en/professionals/t/trachtenberg-marc-h>

[Greenberg Traurig Logo]
[cid:image002.png at 01DAC350.04016050]

From: SubPro-IRT <subpro-irt-bounces at icann.org<mailto: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<mailto: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
________________________________
If you are not an intended recipient of confidential and privileged information in this email, please delete it, notify us immediately at postmaster at gtlaw.com<mailto:postmaster at gtlaw.com>, and do not use or disseminate the information.
_______________________________________________
SubPro-IRT mailing list
SubPro-IRT at icann.org<mailto:SubPro-IRT at icann.org>
https://mm.icann.org/mailman/listinfo/subpro-irt<https://urldefense.com/v3/__https:/mm.icann.org/mailman/listinfo/subpro-irt__;!!DUT_TFPxUQ!HXGzXfhh1pbpbJeH7QdHMtUvq70bEdtL0ABSYob0to5EynujmgFw7o9J9IdNuJl4ccLlJHjHO_emLfbp4Q$>

_______________________________________________
By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy (https://www.icann.org/privacy/policy<https://urldefense.com/v3/__https:/www.icann.org/privacy/policy__;!!DUT_TFPxUQ!HXGzXfhh1pbpbJeH7QdHMtUvq70bEdtL0ABSYob0to5EynujmgFw7o9J9IdNuJl4ccLlJHjHO_f4DePVxw$>) and the website Terms of Service (https://www.icann.org/privacy/tos<https://urldefense.com/v3/__https:/www.icann.org/privacy/tos__;!!DUT_TFPxUQ!HXGzXfhh1pbpbJeH7QdHMtUvq70bEdtL0ABSYob0to5EynujmgFw7o9J9IdNuJl4ccLlJHjHO_dlw_MLfQ$>). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <https://mm.icann.org/pipermail/subpro-irt/attachments/20240621/d7dd7f4b/attachment-0001.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image001.png
Type: image/png
Size: 12852 bytes
Desc: image001.png
URL: <https://mm.icann.org/pipermail/subpro-irt/attachments/20240621/d7dd7f4b/image001-0001.png>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image002.png
Type: image/png
Size: 6018 bytes
Desc: image002.png
URL: <https://mm.icann.org/pipermail/subpro-irt/attachments/20240621/d7dd7f4b/image002-0001.png>