The Controversial .Com Contract Amendment: Verisign’s Stance on Public Comments and Future Pricing

Verisign suggests that drawing attention to the comment period distorted the multistakeholder process, igniting a significant debate within the internet governance community.

Introduction to the .Com Contract Amendment Debate

The recent comment period for ICANN’s proposed .com contract amendment with Verisign (NASDAQ: VRSN) concluded last Friday, drawing widespread attention and thousands of submissions. This amendment, if approved, would grant Verisign the authority to significantly increase .com domain name prices in four out of every six years. The potential for these price hikes has stirred considerable apprehension among domain registrants, registrars, and investors alike, highlighting fundamental tensions within the internet governance framework.

Among the multitude of voices contributing to the public record was a notable submission from Verisign itself. This document has since become a focal point of discussion, not just for its content but for its controversial claims regarding the nature of the public comment process. Verisign’s letter contends that certain parties, primarily domain name registrars and investors—whom it refers to as “speculators”—have actively “distorted and undermined the multistakeholder process” by the very act of encouraging public participation during the designated comment period.

Verisign’s Stinging Critique: Distorting the Multistakeholder Process?

Verisign’s core argument hinges on the assertion that domain name registrars and investors have improperly influenced the comment period. The company specifically claims that these entities encouraged their customers and constituents to submit comments on the proposed amendment, thereby skewing the perception of public sentiment. Verisign suggests that ICANN should therefore discount, or at least give less weight to, comments submitted as a result of such encouragement.

The underlying premise of Verisign’s critique is that registrars, allegedly aligned with domain investors, failed to present the “whole story” to their customers. In Verisign’s view, this implies that the information provided by registrars was biased, leading registrants to comment against the amendment without a complete understanding of its supposed benefits or necessity. This argument attempts to reframe legitimate public engagement as a manipulated effort, casting doubt on the authenticity and validity of thousands of individual submissions.

The Namecheap Example: A Case Study in Verisign’s Accusations

To bolster its case, Verisign singled out specific examples, notably implying that many customers of registrars like Namecheap are primarily domain investors. The company cited instances such as the registration of “Covid-19.com” through Namecheap, suggesting that the registrant likely intended to profit from the domain. Furthermore, Verisign pointed to Namecheap’s practice of listing premium domains on its site as evidence that its customer base predominantly consists of investors. From this, Verisign concluded that comments from Namecheap customers should be regarded as those of “domain investors” and thus subject to discounting.

While it is undeniable that outreach efforts by Namecheap, the Internet Commerce Association (ICA), and other registrars had a significant impact on the volume of comments—resulting in nearly 9,000 submissions—it also highlights a crucial aspect of democratic participation. Many individuals and small businesses, the very grassroots of the internet, would likely have remained unaware of the comment period without such notifications or media coverage. These efforts served to inform and empower a broader segment of the internet community to voice their concerns about a policy that directly affects them.

The Multistakeholder Model: A Call for Grassroots Engagement

Verisign’s desire for ICANN to avoid treating each comment as a direct “vote” is, in principle, understandable. Government guidelines, including those in the U.S., often state that comments to agencies are not votes, and their weight can vary based on the depth of analysis, unique insights, and factual arguments presented. Indeed, if every comment were a vote, decisions like the elimination of .org price caps might have unfolded differently.

However, the actions of Namecheap, the Internet Commerce Association, and other registrars during the comment period are far from unprecedented. In fact, this type of grassroots engagement is a common and vital practice in various forms of government advocacy. Organizations such as the American Cancer Society, veterans groups, and environmental advocates routinely encourage their supporters to submit comments to government officials and agency decision-makers. Such actions are crucial for ensuring that the voices of those directly affected by policy decisions are heard, preventing decisions from being made in a vacuum without broader public input. Agencies, by design, need to understand the real-world impact of their policies on the citizenry.

The Inevitability of Self-Interest in Public Discourse

Verisign’s assertion that commenters on the .com proposal are acting in their “self-interest” is, frankly, a statement of the obvious. It is a fundamental aspect of human behavior and public discourse that individuals and groups participate in such processes to advocate for outcomes that benefit them. Whether it’s seeking increased government funding for medical research, advocating for veterans’ benefits, or pushing for net neutrality, people rarely submit comments that are deliberately against their own perceived interests.

In this specific context, all parties are operating from a position of self-interest. Verisign is demonstrably looking out for its own best interests, those of its investors, and its shareholders. Similarly, domain registrants, who stand to incur higher costs, are commenting in their own interest to avoid paying more money in the future. It is highly improbable that many registrants would voluntarily advocate for increased pricing. This symmetrical pursuit of self-interest underscores the natural tension inherent in any policy debate involving economic implications for diverse stakeholders.

Unpacking Verisign’s Strategy: A Monopoly’s Tactics

From a purely business perspective, one can acknowledge Verisign’s primary directive: to maintain its control over the critical .com domain and maximize revenue for its shareholders. This is a standard corporate objective, and management’s duty is to pursue it. However, the methods Verisign employs in this pursuit frequently draw the ire of industry observers and highlight the peculiar market dynamic created by a no-bid, presumptive renewal contract for a fundamental internet resource.

The sheer audacity, or “chutzpah,” displayed by Verisign in its public communications is often described as “jaw-dropping” by industry figures. This perceived arrogance, coupled with a disingenuous shift in its stance towards domain investors, contributes to a sense of frustration within the community.

The Unique Position of .Com: A Single Supplier Dilemma

Perhaps the most striking criticism leveled against Verisign’s approach is its sudden demonization of domain investors. It’s a surprising turn given that, in previous years, Verisign actively developed products and tools specifically for domain investors. The company courted these investors, actively encouraging them to register more domain names, especially when it was unable to increase .com prices. During those periods, the only viable path to grow revenue was to expand the volume of domain registrations, a feat that natural demand alone could not achieve. Domain investors were thus a critical component of Verisign’s growth strategy.

Now that significant price hikes are on the table, Verisign has performed an abrupt about-face. Domain investors, once allies in revenue generation, are now portrayed as “speculators” whose contributions to the comment period should be dismissed. This pivot is particularly strategic because domain investors are often an easy target; they are frequently misunderstood or disliked by the general public. By implying that the majority of dissenting comments originate from these “investors,” Verisign attempts to discredit a vast swath of legitimate public feedback.

This situation is further exacerbated by Verisign’s unique market position. In most industries, if a supplier treated its customers with such disregard, those customers would simply seek an alternative provider. However, Verisign holds a near-monopoly as the sole supplier of .com domain names. This lack of alternative forces customers to contend with Verisign’s decisions, regardless of their dissatisfaction, cementing its power in a way few other companies can.

A Legacy of Strategic Maneuvers: How Verisign Secured Its Dominance

Verisign’s current position of power and its ability to push for perpetual price increases are the culmination of a long and meticulously played strategic game to maximize revenue from its control of .com. The company has repeatedly demonstrated a remarkable ability to navigate complex legal and regulatory landscapes to its advantage.

One prominent example is the “Site Finder” debacle. After launching a controversial service that redirected unregistered .com and .net domains to a Verisign search page, the company faced widespread outcry and a subsequent lawsuit. The eventual settlement of this lawsuit with ICANN was a monumental victory for Verisign. As recounted by Vint Cerf, then Chairman of the ICANN Board, at a 2006 Domain Roundtable event, the resolution was seen as the “best possible outcome at the time.” This “best outcome” for ICANN solidified Verisign’s perpetual right to administer the .com contract, laying the groundwork for its enduring market dominance.

The Billion-Dollar Amendment: U.S. Government’s Role

However, Verisign’s most significant triumph may have occurred more recently, at the end of 2018. This was when the U.S. government amended its Cooperative Agreement with Verisign. This critical amendment, contingent upon ICANN’s agreement, would allow Verisign to increase .com prices by 7% in four of the six years within each contract term. While a substantial win for Verisign over the remainder of the current contract period, the truly transformative aspect is that Verisign secured this right in perpetuity. This means the agreement can only be modified by mutual consent of the U.S. government and Verisign, effectively immunizing these price hike provisions from future U.S. administrations. Only ICANN now stands as a potential, albeit seemingly reluctant, barrier. This amendment alone was valued at billions of dollars for Verisign, fundamentally altering its revenue potential.

Adding another layer to its strategic play, Verisign even went so far as to hire the former counsel for the Internet Commerce Association—an organization that has historically advocated for the domain industry—to assist in crafting arguments against domain investors and price controls. This move was a clear demonstration of Verisign’s meticulous planning and resource allocation to achieve its objectives.

Yet, even after securing this multi-billion-dollar concession from the U.S. government (again, assuming ICANN’s final approval), Verisign exhibited further provocative behavior. The day after the amendment became public, the company published an inflammatory blog post directly attacking domain investors. This aggressive stance suggests either that Verisign is not content with the 7% price increases and aims for complete deregulation, or it simply harbors a deep-seated vindictiveness towards segments of the domain community.

Predicting the Future: What Lies Ahead for .Com Prices?

Given the intricate dynamics and Verisign’s historical success in navigating regulatory hurdles, the most probable outcome appears clear: despite overwhelming public opposition to the proposed price hikes, ICANN is likely to proceed with the amendment. ICANN’s stance has increasingly shifted, with the organization signaling that it no longer perceives itself as a “price regulator.” Instead, it appears inclined to defer to the U.S. government’s position on pricing matters, effectively passing the responsibility to another authority.

Should the amendment be approved, Verisign will undoubtedly begin implementing the approved price increases. Domain investors and individual registrants will likely voice their dissatisfaction, but with limited recourse, they will ultimately absorb the higher costs. Verisign, ever vigilant in maximizing its revenue, will continue to exert pressure, potentially even petitioning the U.S. government to remove all remaining price caps on .com domains, further solidifying its monopolistic power.

However, such an aggressive pursuit of profit, particularly from a critical internet utility, may not go unchecked indefinitely. At some point, the company’s profitability could become so astronomically high that it attracts increased scrutiny from a wider array of stakeholders, including potentially leading to calls for antitrust investigations. Alternatively, a large corporation with notoriously thin margins might acquire Verisign, integrating its highly profitable .com operation into its broader overhead, thereby effectively “hiding” this money-printing press within its vast financial reports. The future of .com pricing and Verisign’s role in the domain industry remains a critical area of observation within the evolving landscape of internet governance.