European Commission comments - ICANN Auction Rules in the new gTLD program

[<Linda.Corugedo-Steneberg@xxxxxxxxxxxx>]

Dear ICANN,

The European Commission appreciates the opportunity to comment on the recently 
updated ICANN’s New gTLD Auction Rules and welcomes ICANN's interest in the 
community views expressed in Buenos Aires, including at the GAC and Public 
Forum.

Please find below our comments.

Best regards

Linda CORUGEDO STENEBERG
DIRECTOR

[cid:image001.gif@01CF20CF.7DAF3FF0]
European Commission
Communications networks, Content and Technologies Directorate-General, DG 
CONNECT
Cooperation, Directorate D
EU GAC representative

BU 25 06/24
B-1049 Brussels/Belgium
+32 22996383
Mobile+32-498996383
linda.corugedo-steneberg@xxxxxxxxxxxx<mailto:linda.corugedo-steneberg@xxxxxxxxxxxx>




Public Comment on new gTLD Auction Rules

1.       General comments
We are deeply concerned about the implications that the Auction Rules in the 
gTLD program may have for the protection of public policy interests, 
competition, openness and innovation. As a general principle, ICANN should 
implement Auction Rules that are consistent with its Bylaws, its non-for profit 
status, the objectives of the new gTLD Program and the Applicant Guidebook to 
promote competition, diversity, innovation and consumer choice. As expressed in 
several comments already submitted during the comment period, the current 
Auction Rules are advantageous for portfolio applicants rather than for small, 
innovative and community applicants, which is at odds with the “diversity and 
innovation” policy that ICANN seeks to promote. It would be desirable to give 
these applicants a more even playing field when they come up against larger 
portfolio holders in the contention process. Also, ICANN's auction rules has 
not yet proven convincing to the community and deserves being revisited in 
light of the input received.

2.       Relevant GAC advice
The European Commission regards positively the explicit mention in the Auction 
Rules of the need to "resolve any applicable GAC advice" prior to the 
participation in the auction process, as part of the applicant's "eligibility" 
criteria, but regrets the lack of reference to "community applications" or 
applications with community support, despite the reiterated GAC advise. In this 
regard the European Commission seizes this opportunity to recall the following 
passages of recent GAC advice:


  *   "The GAC advises the board that in those cases where a community, which 
is clearly impacted by a set of new gTLD applications in contention, has 
expressed a collective and clear opinion on those applications, such opinion 
should be duly taken into account, together with all other relevant 
information." (Beijing Communique)
  *   "The GAC reiterates its advice from the Beijing Communiqué regarding 
preferential treatment for all applications which have demonstrable community 
support, while noting community concerns over the high costs for pursuing a 
Community Objection process as well as over the high threshold for passing 
Community Priority Evaluation". (Durban Communique)
  *   "The GAC requests a briefing on the public policy implications of holding 
auctions to resolve string contention (including community applications)." 
(Buenos Aires Communique).
It is essential that the outcome of the briefing on the public policy 
implications of holding auctions requested in the Buenos Aires GAC Communique 
and the reflections of the GAC on this particular issue are fully taken into 
account when defining the Auction Rules. Particularly, the auction process 
should not be initiated until the GAC's briefing request is duly addressed by 
the ICANN Board.

3.       ALAC – Community applications statement
It is important to make a specific reference to the At-Large Community (ALAC) 
statement of 9.08.2013 on preferential treatment for community applications in 
string contention; ALAC stressed that some of the new gTLD applications that 
are intended for communities and have wide public support were not submitted as 
community applications; those applications are currently in contention with 
others not designed for the benefit of specific communities and driven purely 
by commercial considerations. In this regard the European Commission 
(consistent with its position in the GAC) fully endorses the GAC view that 
community applications and applications with community support should be given 
preferential treatment in the new gTLD string contention resolution process, 
and remind the clear above mentioned GAC Beijing and Durban Communiques.

4.       Security and consumer protection
Security and consumer protection are fundamental public policy objectives. 
Therefore we endorse those comments proposing that the winning applicant is 
contractually required to ensure that all security related gTLDs adopt 
technologies that improve the level of trust of Internet users. A "secure" gTLD 
implies that the resources offered are truly secure and operating under 
specific policies that warrant a dedicated level of security to end users. It 
is therefore contrary to this public policy interest that the winning applicant 
is decided through an auction process that may simply favour deep pocket 
applications.


Therefore we will repeat again our concern about the negative impact that 
auctions may have for the preservation and enhancement of the operational 
stability, reliability, security and global interoperability of the Internet, 
as expressed during the Buenos Aires GAC meeting: "The European Commission 
believes that in the new gTLD program, ICANN should aim not just to maintain, 
but also enhance the level of consumer protection and confidence in gTLDs. 
ICANN should therefore take this social and community responsibility into 
account in their implementation plan. It is our understanding that trusted 
domains such as .safe, .secure and .security risks being awarded to applicants 
based only upon the price they are willing to pay in an auction. We therefore 
urge ICANN, in the interest of fostering innovative solutions that enhance 
global security, not to allow purely commercial interests to prevail in the 
delegation of these domains.



5.       Negotiations between applicants prior to the Auction process



Over and above, there seems not to be any incentive for financially strong 
applicants to solve the contention “through voluntary agreement among the 
involved applicants”. This solution places an unnecessary burden on applicants 
and departs from the artificial assumption that parties are eager to negotiate.

6.       Destination (use) of Auction funds
We also note the lack of clarity as regards the destination of the significant 
funds that ICANN will receive as a result of these auctions; it is therefore 
highly recommended that ICANN begins a consultation process with the community 
to determine the allocation of the funds gathered through this process, with a 
focus on its use for community support, capacity building and engagement of 
stakeholders in least developed nations.


7.       Unilateral powers to modify Auction Rules



ICANN shall not be entitled in its sole discretion to amend these Auction Rules 
"for any auction at any time and for any reason prior to the deposit deadline 
for that auction". The abovementioned unilateral power to change the rules 
currently under negotiation only contributes to increase applicants' 
uncertainty. The European Commission fully supports that "Any proposed changes, 
at a minimum, should be announced publicly at least 30 days in advance of any 
auction, and should be for good cause based on exigent circumstances".



We are confident that community input received will allow ICANN to amend the 
current draft Auction Rules (version 2013.12.12) in a manner consistent with 
ICANN's objectives and fully rooted in the principle of fairness.