Groups Say ICANN, VeriSign Deal Needs Anti-Trust Review

Two domain name registration trade groups are suing the Internet Corporation for Assigned Names and Numbers (ICANN) and VeriSign, alleging that a recently reached settlement between the two parties violate anti-trust laws.

The legal action is just the latest example of dissent within the domain registration community about the way ICANN conducts business and especially over its decision to give VeriSign control of both the “.net” and “.com” registries, two of the largest and most lucrative Internet name businesses.

But ICANN is already claiming early victory after a Federal judge denied a request by one of the suing parties to put a block on the implementation of the tentative agreement until the lawsuits can be heard and decided.

The World Association of Domain Name Developers (WADND) and the Coalition for ICANN Transparency (CFIT) filed lawsuits earlier this week in San Jose, Calif. The suits target the settlement between ICANN and VeriSign, one that ended various legal disputes and also put VeriSign in charge of the two domains until 2012 and gives VeriSign the right to raise the prices is charges domain resellers up to 7 percent each year.

That price-hike component is a major sticking point, with registrars seeing it as a way for VeriSign to make it increasingly uneconomic for re-sellers to conduct business or forcing them to pass cost hikes along to consumers.

ICANN, meanwhile, indicated that it was not ruling out some changes to the agreement, saying it was using this week’s meetings of Internet interests in Vancouver, B.C. to “seek comment from the public and its various stakeholder groups on the proposed settlement.”

Familiar Ring

The suits allege several infractions, including violation of anti-trust laws, restraint of free trade under Federal law as well as unfair business practices under California law.

CFIT said several elements of the settlement are of concern to it, but took special aim at what it called a “lack of transparency” in the way ICANN operates and “a continued erosion of checks-and-balances” in governing of the Internet.

The settlement “is the latest proof that ICANN continues to demonstrate it cannot operate fairly on behalf of consumers and other Internet stakeholders,” CFIT said in a statement.

The groups noted that VeriSign was awarded the “.com” registry extension a full two years before its existing contract expired and without the competitive bidding process that is typically used to assign top-level-domain registry responsibilities. ICANN did conduct a bidding process for the “.net” domain, a process that also came under heated criticism as some bidders said their qualifications were understated by a third party reviewer brought in to help ICANN reach a decision.

Something Old, Something New

For its part, VeriSign said it believes the suits are motivated by a new service it intends to introduce. Central Listing Service, or CLS, will enable registrars to bid on domain names on behalf of end users, with VeriSign getting a percentage of the final fees.

Ironically, it was another novel VeriSign service that sparked the dispute with ICANN that led to the settlement. VeriSign sued ICANN after it forced the company to shut down its NameFinder service, which directed users who mistyped domain names to a VeriSign-controlled site.

Info-Tech Research Group analyst Curtis Gittens said the VeriSign dust-up is just one major problem that ICANN is now wrestling with. Though ICANN won a temporary reprieve from a movement to expand control of the Web beyond the U.S., that issue won’t go away. And registrars will likely continue to pressure ICANN on its VeriSign deal.

Gittens said the VeriSign deal is also an example of why ICANN continually faces calls to allow more transparency of its actions and its decision-making process.

“Giving VeriSign the dot-com domain contract was just the outgrowth of an already seriously flawed process,” Gittens said.