The .web TLD Saga: Verisign Escalates Pressure on ICANN for Delegation

The long-running dispute over the highly coveted .web top-level domain (TLD) has reached a critical juncture, with Verisign (NASDAQ: VRSN) intensifying its efforts to compel the Internet Corporation for Assigned Names and Numbers (ICANN) to finalize the delegation process. After years of procedural delays, legal challenges, and a landmark auction, Verisign, through its acquisition agreement with Nu Dot Co, is calling for an immediate resolution, underscoring the protracted nature of this high-stakes domain name battle.

The latest push from Verisign comes in the form of a recent blog post, which serves as a follow-up to a detailed letter (PDF) sent to ICANN by Nu Dot Co. Both communications meticulously review the convoluted history of the .web TLD application and, significantly, present what Nu Dot Co claims to be evidence of inappropriate behavior by its adversaries within the domain name space. This renewed offensive highlights Verisign’s growing impatience and its firm belief that all conditions for delegation have been met, or that any outstanding issues are a result of ICANN’s inaction.

The Genesis of the .web TLD Dispute: A Multi-Million Dollar Auction

The journey of the .web TLD began during ICANN’s ambitious 2012 New Generic Top-Level Domain (gTLD) program, an initiative designed to expand the internet’s naming system beyond traditional domains like .com and .org. Nu Dot Co (NDC), a company established by the visionary founders of .Co Internet, was among the numerous applicants vying for control of .web, recognizing its immense potential as a universal and highly marketable domain. Given the inherent value and broad appeal of “.web,” the contention set for this specific TLD was highly competitive, featuring several industry giants.

Following the close of the application period, Verisign, a dominant player in the domain name industry and the long-standing operator of the crucial .com and .net registries, recognized the strategic importance of adding .web to its portfolio. Verisign subsequently entered into an agreement with Nu Dot Co. Under this arrangement, Nu Dot Co would actively participate in the ICANN-managed auction for .web, and upon winning, Verisign would then acquire the rights to operate the top-level domain from Nu Dot Co. This strategic maneuver set the stage for one of the most significant and controversial gTLD auctions in ICANN’s history.

The auction for .web eventually concluded with Nu Dot Co emerging victorious, securing the TLD with a staggering bid of $135 million. This monumental sum was precisely the amount of the second-highest bid, which was placed by Afilias, another prominent registry operator and a key competitor in the new gTLD space. The outcome sent ripples through the domain industry, triggering a wave of discontent among other applicants who had also invested heavily in their bids for .web.

Controversy and Challenges: The Aftermath of the Auction

The dissatisfaction among the losing applicants stemmed from several factors. Firstly, the victory of a Verisign-backed entity was a bitter pill for many, given Verisign’s already dominant position in the domain market. Secondly, and perhaps more controversially, Nu Dot Co opted for an ICANN-run “auction of last resort” rather than a private auction. In a private auction, the losing applicants often stand to receive a share of the proceeds, potentially amounting to tens of millions of dollars each. Indeed, one .web applicant had reportedly promised Nu Dot Co a minimum of $17 million if it had lost the auction, highlighting the significant financial implications of the chosen auction format.

This decision ignited a series of legal and procedural challenges. Donuts, another significant applicant and a major new gTLD registry, swiftly initiated a lawsuit to contest the auction’s legitimacy and outcome. However, after a period of litigation, the judge ultimately dismissed Donuts’ case, concluding that its claims lacked sufficient merit to proceed. While this might have seemed like the end of the road for the opposition, the baton was quickly picked up by Afilias, the second-highest bidder, ensuring the dispute would continue its complex trajectory.

Afilias chose a different avenue for redress: filing for “cooperative engagement” with ICANN, a formal process for addressing disputes within the ICANN framework. When this approach failed to yield a satisfactory outcome, Afilias escalated the matter to the Independent Review Process (IRP). The IRP is a crucial mechanism within ICANN’s governance structure, allowing external panels to review specific ICANN Board actions or inactions against its own bylaws and policies.

The Independent Review Process (IRP) Ruling and ICANN’s Stance

The IRP panel’s findings were highly critical of ICANN’s handling of the .web dispute. The net result of that IRP was a strong admonishment, faulting ICANN for its reluctance to take a definitive stance on the legitimacy of Nu Dot Co’s deal with Verisign. The panel emphasized that while ICANN might perceive itself as being “caught in the middle of this dispute between powerful and well-funded businesses,” this perception does not absolve it of its core responsibilities.

In a particularly pointed statement, the IRP panel wrote:

It may be fair to say, as averred in the [ICANN’s] Response, that “ICANN has been caught in the middle of this dispute between powerful and well-funded businesses”. However, in the Panel’s view, it is not open to [ICANN] to add, as it does in the same sentence of its Response, “[and ICANN] has not taken sides”, as if [ICANN] had no responsibility in bringing about a resolution of the dispute by itself taking a position as to the propriety of NDC’s arrangements with Verisign.

This ruling was a significant turning point, effectively kicking the decision back to ICANN and instructing the global internet authority to make a clear determination, something it should have done much earlier in the process. The IRP’s intervention highlighted a systemic issue within ICANN’s dispute resolution mechanisms: a tendency to defer difficult decisions, prolonging uncertainty for all parties involved.

Accusations, Counter-Accusations, and Industry Double Standards

Verisign’s recent blog post and Nu Dot Co’s letter to ICANN contain a considerable degree of strategic narrative shaping, or “spin.” They suggest that the other applicants were attempting to manipulate the auction process by settling among themselves, which, as Verisign argues, “would in turn deny the broader internet community the benefit of the proceeds of a public auction.” It’s worth noting that private settlement of contention sets was, at one point, actively encouraged by ICANN as a means to resolve disputes efficiently. However, the exact boundaries of appropriate conduct in such settlements are often blurred, and there were indeed communications among some parties that likely violated a “blackout clause” put in place ahead of the ICANN auction, designed to prevent collusion.

Critics of Verisign’s business practices often point to its significant market power and historical controversies. However, in the context of the .web ordeal, the behavior of some other applicants has also drawn scrutiny. A frequent point of contention is the perceived double standard within the industry. For instance, there was notably less outcry or legal challenge when Automattic acquired the .blog TLD through a private auction. This process directly benefited other applicants who shared in the proceeds. The key difference, from the perspective of some industry players, was the absence of Verisign’s involvement, suggesting that much of the opposition to the .web deal may have been fueled by a broader dislike of Verisign’s influence rather than consistent adherence to principles regarding auction fairness.

The perceived hypocrisy from certain quarters has complicated the narrative, making it harder for ICANN to navigate the ethical and procedural complexities. While Verisign’s critics are vocal, the selective application of concerns regarding auction integrity raises questions about the true motivations behind the prolonged dispute.

The Urgent Call for ICANN’s Decisive Action

The protracted nature of the .web TLD dispute has created an environment of uncertainty, hindering the potential growth and innovation that a highly anticipated TLD like .web could bring to the internet. For all stakeholders involved—Verisign, Nu Dot Co, Afilias, Donuts, and indeed the broader internet community—the current stalemate is unproductive and costly. The consensus among many industry observers, irrespective of their alignment with specific parties, is that it is high time for ICANN to fulfill its mandate and make a definitive decision.

The IRP panel explicitly directed ICANN to take a position. If ICANN’s internal review determines that the agreement between Nu Dot Co and Verisign did not, in fact, violate its established rules and policies, then the path forward should be clear: it is imperative for ICANN to proceed with the delegation of the .web top-level domain to Verisign. Further delays only serve to erode confidence in ICANN’s governance process and its ability to effectively manage the internet’s naming system. The global internet community awaits a resolution that brings closure to this long-standing saga and allows the .web TLD to finally become operational, unlocking its potential for users worldwide.