The European Commission filed a comment on the recently updated ICANN’s New gTLD Auction Rules.

To summarize the European Commission is “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.”

“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.”

For anyone that has interest the comment period with ICANN closes today at 23.59 UTC.

Here is the statement by the European Commission:

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.