News Review | Corruption at ICANN Metastasizing the Internet?

Domain Mondo's weekly internet domain news review (NR 2019-06-09) with analysis and opinion: Features •  1) Corruption at ICANN Metastasizing the Internet? 2) ICANN EPDP Phase 2 Meetings, 3) a. IDN Homographs, b. Michael Gleissner, c. Dark Web Domains, 4) ICYMI: a. Data Privacy & Healthcare, b. U.S. v. Assange, c. Internet Freedom? and more, 5) Most Read.

1) Corruption at ICANN Metastasizing the Internet?

a. ".... We are witnessing corruption metastasizing at the root of the Internet at a breakneck pace. ICANN's precocity and opacity with alternative revenue sources is nothing short of remarkable. The spirit of cooperation that exists between ICANN and its largest ratepayer [Verisign] is unseemly, to say the very least. The stakeholder community that was supposed to serve as the check and balance on the ICANN organization has gone AWOL — bought off by the promise of a pittance and sung to sleep by fanciful lullabies of castles in the sky."--Greg Thomas, Managing Director of The Viking Group LLC (vikinginsight.com) (emphasis added) in ICANN and Voodoo Economics in Wonderland | circleid.com.

"... ICANN itself is probably Verisign's biggest "risk factor" -- see Weinstein case ... ICANN insists it is not a "regulator" and it could [and probably will] be replaced by the "global internet community" fed up with ICANN's incompetence [corruption] and shortcomings ("ICANN multistakeholderism does not work" has already become a common refrain in some sectors). ICANN has not had any governmental mandate since the IANA transition in 2016, and Verisign's .COM Registry Agreement with ICANN may not be worth the paper it is printed on, if ICANN is replaced, or a new internet root is adopted by most of the world. That is why the U.S. government refused to sign registry agreements with ICANN for the .MIL and .GOV [g]TLDs after [during] the IANA transition in 2016 (the U.S. maintains it has governmental "sovereignty" over the .GOV and .MIL [g]TLDs due to the anomaly of its historical "stewardship" over the internet.)"--comment on SeekingAlpha.com | VeriSign For A Defensive Strategy (emphasis, link, and [notes] added).

Editor's note: excerpt from transcript of US Senate Hearing Sept 14, 2016, Larry Strickling, NTIA Administrator, testifying:

"So ... the United States does not wish to cede any sovereignty that we may have over .mil and .gov. And that is why we have done this as an exchange of letters. The United States prior to the creation of ICANN, had the complete authority and control over .mil and .gov; that condition exists today and will continue on in the future." 

Later in the same hearing, Paul Rosenzweig testifying:

"But, I am puzzled by the argument that entering into a [registry] contract [with ICANN] about these [.MIL and .GOV gTLDs] is somehow a derogation of sovereignty. I had not heard that until Assistant Secretary Strickling said that earlier today or -- and so, I haven't had the chance to think about that."

Note also this video clip about Verisign's "hostile letter threatening witnesses" delivered just prior to that same hearing. Full video of that US Senate subcommittee hearing here.

b. ICANN and PTI U.S. Tax Returns for Fiscal Year Ending 30 June 2018, excerpts:

ICANN Form 990 (pp. 53-54 of 83) 2017 Calendar Year compensation:

Who's missing? Correct answer here.

PTI FORM 990:  "PTI's vendors are paid by PTI's sole member, ICANN ... during the reportable time period of calendar year 2017, PTI had no employees. ICANN employees performing PTI activities were paid by ICANN, its sole member, and ICANN issued their form W-2. Compensation was reported under PTI as paid by a related organization (ICANN). PTI reimburses ICANN for all employee compensation related to PTI activities." [PTI Form 990 pp.29-30 of 40.]

Editor's note: ICANN spent $15 million in legal fees in connection with the IANA transition, in part to set up PTI as a separate entity apart from ICANN for the "IANA functions." To what end?

PTI FORM 990, PART III, LINE 4A (p.29 of 40):
"PTI is an affiliate of the Internet Corporation For Assigned Names and Numbers ("ICANN"). PTI was established in August 2016 under the laws of the State of California as a non-profit public benefit corporation and ICANN is its sole member. ICANN is responsible for the performance of the Internet Assigned Numbers Authority ("IANA") functions. the IANA functions include the maintenance of the registry of technical internet protocol parameters, the administration of certain responsibilities associated with internet DNS root zone and the allocation of internet numbering resources. Through contracts and subcontracts, ICANN has delegated the performance of the IANA functions to PTI effective October 1, 2016. PTI's sole purpose is the performance of the IANA functions as delegated by ICANN under a direct contract with PTI as well as three subcontracts. through this series of agreements, ICANN is obligated to provide PTI with all funding necessary for PTI to perform the agreements. PTI has no other funding source."

c. Andean Presidential Council's Special Declaration on the use of .AMAZON (pdf):

Editor's note: the above letter should never have had to be written had ICANN acted in the global public interest and done its job properly from the beginning, but as most of us know, ICANN is incompetent, corrupt and unfit. "Sovereignty" is not just a prerogative reserved for the U.S. and China. The .BRAND (i.e., trademark) new gTLDs were an ICANN corruption of the concept of "generic top-level domains" (see RFC1591). A "brand" a/k/a "trademark" is neither a monopoly nor generic. The entire ICANN new gTLDs program was, from the beginning, and still is, ill-conceived and corrupt. It is no surprise that new gTLDs are failing. A report published by afnic.fr this week indicates the future belongs to ccTLDs and .COM [at least as long as .COM is regulated by the U.S. government]:

"... main market trends in 2018: with 142 million names, the .COM remains the market heavyweight. Its market share increased by 0.5 points in 2018, rising from 42.6% to 43.1%, as a result of a growth rate that increased sharply in 2018 (5.2% vs. 2.8% in 2017) ..." --afnic.fr

ICANN has yet to be held accountable for the billions of dollars (US) in capital destruction and malinvestment it has caused through its ill-conceived and corrupt new gTLDs program. Another sad tale (among many) came to light this week: DigitalTown “clean up efforts” to avoid bankruptcy--DomainNameWire.com.

2) ICANN GNSO EPDP Phase 2 | Next EPDP Meeting June 13

Next EPDP Meeting Thursday, June 13, at 14:00 UTC (10am EDT), agenda, etc., here; observers' audiocast / phone (if needed). June 6 meeting notes and action items. Links to the EPDP meetings' recordings and transcripts (when available) are posted on the GNSO calendar. Other EPDP Links: wiki, public mail list, GNSO mail list, worksheets, purposes template (pdf, updated Jun10).

Steve Crocker presentation background document (pdf). Note also: Working Definitions draft June 5, 2019 (pdf)--'access' vs 'disclosure' for third parties-- the EPDP Team failed to come to a "consensual compromise" but the new [updated] revised "working definitions" are here.

EPDP subgroup meetings:

• Monday, 03 June - 14:00-15:30 UTC: Display of information of affiliated vs. accredited privacy / proxy providers; Legal vs natural persons.
• Wednesday, 12 June - 20:00 – 21.30 UTC: City field redaction; Data Retention.

• Monday 17 June – 13:00 – 14:30 UTC: Potential OCTO Purpose; Feasibility of unique contacts to have a uniform anonymized email address.
• TBC (post ICANN65): Accuracy and WHOIS ARS.

See also: 

• EDPS flags data protection issues on EU institutions’ websites--edps.europa.eu.

• Looker & GDPR: Google Cloud To Buy Data Analytics Startup Looker for $2.6B.

3) Names, Domains & Trademarks

a. 10 important academic findings about trademarks from the past 12 months--#8. IDN homograph domain names are a major threat to online brands.

b.  WTR infographic about the trademark activity of Michael Gleissner: 4400 trademark applications and 5300 domain names are linked to Gleissner, who was born in Germany but reportedly now lives in the Philippines.

c. The Dark Web is tiny and unreliable: analysis of 55K onion domains on the Tor network finds only 8,400 had a live site, with many having poor uptimes--recordedfuture.com.

4) ICYMI Internet Domain News 

a. Data Privacy & Healthcare: a primer on complying with U.S. healthcare regulations on data privacy--9 Indispensable Steps to Becoming a HIPAA Hipster | PsychologyToday.com. The Health Insurance Portability and Accountability Act was enacted in 1996 and is applicable to the entire healthcare industry in the U.S.  The most common HIPAA violations are impermissible disclosures of protected health information.

b. U.S. v. Assange: The U.S. Government’s Indictment of Julian Assange Poses a Clear and Present Danger to Journalism, the Freedom of the Press, and Freedom of Speech | eff.org.

c. Internet Freedom?

One of the greatest & most exciting promises of the early internet was its unparalleled freedom of expression, action & exploration unconstrained by Govt & corporate control. Just 2 decades later, it's about begging a handful of tech giants about who should & shouldn't be heard.

— Glenn Greenwald (@ggreenwald) June 1, 2019

d. Hong Kong's Tiananmen vigil attracts record turnout--nikkei.com: "The annual candlelight vigil at Victoria Park drew over 180,000 people this year, according to the organizer, the Hong Kong Alliance in Support of Patriotic Democratic Movements of China. This number ties with the peak year of 2014."

e. Russia: the Russian plan for a “sovereign internet” will use deep packet inspection for censorship and a backup domain name system--FT.com.
•
5) Most Read this past week on DomainMondo.com: 

#1 News Review | ICANN GNSO EPDP Phase 2 Battle Over Definitions

#2 Looker & GDPR | Google Cloud To Buy Data Analytics Startup for $2.6B

#3 Amazon re:MARS Global AI Event, Las Vegas, June 4-7, 2019

-- John Poole, Editor • Domain Mondo 

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DISCLAIMER

Did ICANN Just Break the Internet? No, But It Could Have, and May Yet

ICANN.org: "ICANN's mission is to help ensure a stable, secure and unified global Internet. To reach another person on the Internet, you have to type an address into your computer - a name or a number. That address has to be unique so computers know where to find each other. ICANN helps coordinate and support these unique identifiers across the world. ICANN was formed in 1998 as a not-for-profit public-benefit corporation and a community with participants from all over the world. ICANN and its community help keep the Internet secure, stable and interoperable. It also promotes competition and develops policy for the top-level of the Internet's naming system and facilitates the use of other unique Internet identifiers."

If you live in the U.S., you may have noticed or been affected by the internet outage on Friday caused by a distributed denial-of-service (DDoS) attack:

• Fusion.net: WTF is happening to the internet today? Internet down after DDOS attack. 
• Bloomberg.com: Possible Vendetta Behind the East Coast Web Slowdown: "Millions of internet users temporarily lost access to some of the world’s most popular websites Friday, as hackers hammered servers along the U.S. East Coast with phony traffic until they crashed, then moved westward. In what is believed to be a coordinated attack on one particular Domain Name Server provider, the hack took down sites including Twitter, Spotify, Reddit, CNN, Etsy and The New York Times for long stretches of time, from New York to Los Angeles ..."

Coincidentally (or maybe not), this attack came only a day after ICANN, global coordinator of the DNS including the internet Root Zone file (via subsidiary PTI), announced that pursuant to the Obama administration's IANA Stewardship Transition, "Verisign [NASDAQ: VRSN] will now perform the root zone maintainer services for ICANN under the Root Zone Maintainer Service Agreement (RZMA). ICANN and Verisign are in the process of switching to the root zone management systems that do not include NTIA’s [U.S. government] authorization role." 

Unfortunately for internet users around the world, incompetent ICANN has for several years been so obsessed with its new gTLDs program, seeing itself as a 'marketing agency' for new generic top-level domains from .PORN to .SUCKS, to now "over 1000 new gTLDs," that it has been lax in its primary duty of ensuring the security and stability of the domain name system (DNS). See, for example, on DomainMondo.com:

• Verisign, ICANN, Internet Root Zone, Risk Factors to the Root Domain 26 October 2015
• Internet DNS Root Stability, New gTLD Domains, ICANN Study RFP 08 June 2015

In the most recent Verisign 10-Q filing with the SEC (Q2 2016), Verisign warns (as it has for several years) under "Risk Factors":

"Under its New gTLD Program, ICANN has recommended delegations into the root zone of a large number of new gTLDs. In view of our role as the Root Zone Maintainer, and as a root server operator, we face increased risks should ICANN’s delegation of these new gTLDs, which represent unprecedented changes to the root zone in volume and frequency, cause security and stability problems within the DNS and/or for parties who rely on the DNS. Such risks include potential instability of the DNS including potential fragmentation of the DNS should ICANN’s delegations create sufficient instability, and potential claims based on our role in the root zone provisioning and delegation process. These risks, alone or in the aggregate, have the potential to cause serious harm to our Registry Services business. Further, our business could also be harmed through security, stability and resiliency degradation if the delegation of new gTLDs into the root zone causes problems to certain components of the DNS ecosystem or other aspects of the global DNS, or other relying parties are negatively impacted as a result of domain name collisions or other new gTLD security issues, such as exposure or other leakage of private or sensitive information."

For a reference to many of the risk factors about which ICANN has been warned, repeatedly, read the attachment included with this letter (pdf), from ICANN Board Chairman Steve Crocker to Patrik Fältström, Chair, ICANN Security and Stability Advisory Committee (SSAC), embedded below (highlighting added):

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DISCLAIMER

NTIA Tells ICANN: IANA Functions Contract Will Expire October 1, 2016

Good news for those in support of ICANN operating without any governmental oversight--U.S. or otherwise--NTIA has told ICANN the current IANA functions contract between ICANN and NTIA will expire as of October 1, 2016:

Letter from NTIA's Larry Strickling to ICANN, August 16, 2016 

The corresponding ICANN announcement:

"... In a letter to ICANN today, NTIA stated, “NTIA has thoroughly reviewed the report. Based on that review, barring any significant impediment, NTIA intends to allow the IANA functions contract to expire as of October 1.”

"ICANN is pleased with NTIA’s statement and is focused on the remaining tasks to be completed by 30 September 2016:

• Finalize the PTI Bylaws: ICANN is currently incorporating comments received during the public comment process that ran from 12 July-11 August and will post a final version on 18 August.

• Finalize the ICANN-PTI Naming Function Agreement, which includes the customer service complaint and escalation mechanisms defined by the CWG-Stewardship: This Agreement is currently out for public comment until 9 September 2016, and a final version will be posted on 16 September 2016.

• Finalize the ICANN-PTI Services Agreement: The Agreement is currently being reviewed and discussed with the multistakeholder community, and a final version will be posted on 16 September 2016.

"In addition, there are four agreements and documents that have been finalized and require signatures, or ICANN Board and/or PTI Board approval before they can be considered complete:

• The Root Zone Maintainer Agreement.

• The ICANN-PTI Protocol Parameters Subcontracting Agreement.

• The ICANN-PTI Numbers Subcontracting Agreement.

• The PTI Conflict of Interest Policy, Board Code of Conduct, and Expected Standards of Behavior."

Larry Strickling, NTIA, also wrote on NTIA's blog:

NTIA's Lawrence E. Strickling

Update on the IANA Transition
August 16, 2016 by Assistant Secretary for Communications and Information and NTIA Administrator Lawrence E. Strickling:

"Two months ago, we passed an important milestone in a nearly 20-year effort to privatize the Internet domain name system (DNS). We announced on June 9 that the transition proposal developed by the Internet multistakeholder community meets the criteria we outlined in March 2014 when we declared our intent to transition NTIA’s stewardship role related to the DNS. While this was a significant moment in this journey, we said in June that the Internet Corporation for Assigned Names and Numbers (ICANN), which currently operates the IANA functions under a contract with NTIA, still had work to do to implement key action items called for in the transition plan.

"On Friday, ICANN informed NTIA that it has completed or will complete all the necessary tasks called for in the transition proposal by the end of the contract term. NTIA has thoroughly reviewed the report. We informed ICANN today that based on that review and barring any significant impediment, NTIA intends to allow the IANA functions contract to expire as of October 1.

"The IANA stewardship transition represents the final step in the U.S. government’s long-standing commitment, supported by three Administrations, to privatize the Internet’s domain name system. For the last 18 years, the United States has been working with the global Internet multistakeholder community to establish a stable and secure multistakeholder model of Internet governance that ensures that the private sector, not governments, takes the lead in setting the future direction of the Internet’s domain name system. To help achieve this goal, NTIA in 1998 partnered with ICANN, a California-based nonprofit, to transition technical DNS coordination and management functions to the private sector. NTIA’s current stewardship role was intended to be temporary.

In March 2014, NTIA initiated the final step in the privatization of the DNS by asking ICANN to convene Internet stakeholders to develop a plan to transition NTIA’s stewardship role for the DNS to the Internet multistakeholder community. Stakeholders spent two years developing a thoughtful consensus proposal that meets the criteria we outlined in 2014 and will strengthen the multistakeholder approach, while maintaining the stability, security, and openness of the Internet that users across the globe depend on today. This multistakeholder model is the key reason why the Internet has grown and thrived as a dynamic platform for innovation, economic growth and free expression.

We appreciate the hard work and dedication of all the stakeholders involved in this effort and look forward to their continuing engagement." (source: NTIA, U.S. Dept. of Commerce)(emphasis added)

See also on Domain Mondo: News Review: ICANN Says It Is Ready for the IANA Transition, Is It Really? (14 August 2016)

See also: ICANN’s 31-page implementation planning status report (pdf).

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DISCLAIMER

News Review: ICANN Says It Is Ready for the IANA Transition, Is It Really?

"ICANN reiterates that it, as an organization, and with the support of the global multistakeholder community, is ready for the IANA stewardship transition to occur."--see  FEATURE further below.

Domain Mondo's review and look ahead [pdf], starting first with the macro view, the big picture, after cutting through all the noise:

• .The U.S. economy, absent consumer spending, is basically in a recession, said billionaire bond-fund manager Bill Gross, in an interview with Bloomberg Television. While employers are hiring, he said “there’s a dearth of investment spending.” See also The Great Productivity Puzzle | NewYorker.com: "Whatever is driving the slowdown in productivity growth in the U.S. appears to be affecting many other advanced countries, like Japan, Germany, France, and the United Kingdom. What is it?" and The big puzzle in economics today: why is the economy growing so slowly? | Vox.com.

•  The Big Disconnect: Triple record for U.S. stock indexes | SeekingAlpha.com: "All three major U.S. equity indexes rose to new highs on Thursday, in an alignment that hasn't occurred since December 31, 1999."--A bullish indicator or bearish? 

•  Macro update from Q2 2016 earnings season--after reports from 86% of S&P 500 companies--via FactSet.com (pdf):

• Blended earnings decline is 3.5% year over year. If the S&P 500 index reports a decline for Q2 once all results are in, it will be the first time the companies in the index will have reported 5 straight quarters of earnings declines since the financial crisis (Q3 2008 - Q3 2009).
• The number of companies issuing negative guidance for Q3 is double those guiding higher (53 vs. 26).
• Wall Street analysts now expect Q3 2016 earnings to decline 1.7% versus the 0.4% growth factored into their models on June 30th. Earnings expectations are now reduced for every sector (not just energy) since the end of the Q2. 

• FEATURE: ICANN Says It Is Ready for the IANA Transition, Is It Really?

ICANN Submits Implementation Planning Status Report to NTIA | ICANN.org 12 Aug 2016: "... ICANN is confident that all implementation tasks and mechanisms will be implemented in advance of September 30, 2016 to allow the IANA functions contract to expire. With this report (pdf), ICANN reiterates that it, as an organization, and with the support of the global multistakeholder community, is ready for the IANA stewardship transition to occur."  But, is it really? Three negative indicators:

1. Conversation on the CCWG-Accountability mail list:

ICANN stakeholder #1: "What is ICANN: public governance body or private coordination body? ICANN by its function is a public governance body, if it is a private body by its form and incorporation that is just an anomaly. All the discussions/ activities regarding the transition process etc are basically aimed at addressing this anomaly, in the practical ways possible. ICANN should therefore be subject to same level of transparency requirements as say the government of the US or of India is subject. Quoting 'standard commercial practices' cuts no ice. Government of India will not be able to give this response to a right to information query."

ICANN stakeholder #2: "ICANN by its function is not a 'public governance body' - it is actually a coordination body that supports the stable and secure operation of the Internet’s various identifier systems ..."

2. "The multistakeholder model may also be undermined from within. ICANN's new governance structure may prove inadequate, or the community too disunited, to hold the ICANN staff or Board accountable. ICANN has already morphed from the technical coordinating body set up in 1998 into something much more like a government: It has the de facto power to tax domain names. It is flush with cash from a flurry of top level domain name applications (e.g., .APP, .SHOP). It is increasingly exercising essentially regulatory powers (e.g., who may use .WINE or .AMAZON). There are good reasons to worry about what it may do with this power absent the incentive for self-restraint created by its contract with the U.S. Indeed, even with the transition at stake, ICANN has demonstrated a troubling willingness to ignore its bylaws and procedures, as demonstrated in the recent ruling in favor of Dot Registry."--Coalition Letter Urging Congress To Sue NTIA and Delay IANA Transition (emphasis added)

3. The vast majority of comments submitted to the Proposed Amendment to .COM Registry Agreement (comments closed August 12), indicate the global multistakeholder community wants a "public governance body"--a domain name price regulator, an intellectual property rights regulator, etc. --not a "private coordination body." 

• How much longer will ICANN remain in denial? 
• How long will the global multistakeholder community tolerate ICANN before looking elsewhere for a public governance body that better meets its needs?

•  The 'Good Old Days' ain't never coming back:

Above: ICANN President & CEO Fadi Chehade's Last Letter to Dilma Rousseff (excerpt)

Brazil Senate Indicts Dilma Rousseff, Opens Impeachment Trial | NBCnews.com: Brazil's Senate voted overwhelmingly on Wednesday [Aug 10] to indict President Dilma Rousseff on charges of breaking budget laws and to begin an impeachment trial that is expected to oust her from office and end 13 years of rule by the Workers Party. See also Brazil Insulted by ICANN President & CEO Fadi Chehade Farewell Letter.

•  Cruz, Lee, and Duffy Increase Scrutiny on Obama Administration's Planned Internet Giveaway | Ted Cruz | U.S. Senator for Texas August 12, 2016: "... We therefore respectfully request that you respond to the following questions no later than 5:00 pm on August 15, 2016:  (1)  Has the DOJ conducted a competition review of Verisign’s .com Registry Agreement with ICANN to assist the NTIA in determining whether the agreement should be extended to 2024?  If so, please provide a complete copy and summary of the review. (2)  If not, will the DOJ conduct a competition review of the .com Registry Agreement before the agreement is extended and the NTIA transfers its oversight authority to ICANN?  Please explain."

•  New gTLD Registry Operator StartingDot "throws in the towel"--Afilias Acquires StartingDot | BusinessWire.com August 08, 2016: "... acquisition of StartingDot, the Registry Operator for 3 new TLDs: .ARCHI, .BIO and .SKI. The acquisition agreement is part of Afilias’ ongoing program of acquiring new TLDs to add to its portfolio ... Other Registry Operators interesting in talking with Afilias should contact us at WeBuyTLDs@Afilias.INFO." StartingDot Executive V.P., Stéphane Van Gelder, currently chairs ICANN’s Nominating Committee, and recently wrote a critique of ICANN in CircleID.

•  Approved Board Resolutions - Verisign as Root Zone Maintainer | Special Meeting of the ICANN Board - ICANN: "Whereas, ICANN and Verisign finalized negotiations on the terms of the proposed RZMA for Verisign to perform the root zone maintainer function, and published the proposed RZMA for a 30-day notice period as required by the IANA Stewardship Transition Coordination Group (ICG) proposal ... Resolved (2016.08.09.05), the proposed RZMA is approved, and the President and CEO, or his designee(s), is authorized to take such actions as appropriate to finalize and execute the Agreement."

•  ICANN Announces Incorporation of Public Technical Identifiers (PTI) | ICANN.org August 11, 2016: "ICANN today announced that the incorporation documents for the "Post-Transition IANA" organization have been filed and received by the California Secretary of State under the name Public Technical Identifiers (which will now be referred to as PTI). With this filing and receipt, PTI is now formed as a nonprofit public benefit corporation and controlled affiliate of ICANN.

•  Comments close this coming week at ICANN on:

• Modifications to GNSO Operating Procedures Relating to Motions and to the Chair and Vice-Chair Elections: Close Date 14 Aug 2016 23:59 UTC
• Proposed Measures for Letter/Letter Two-Character ASCII Labels to Avoid Confusion with Corresponding Country Codes: Close Date 17 Aug 2016 23:59 UTC

•  Other News:

• Walmart Agrees to Acquire Jet.com, One of the Fastest Growing e-Commerce Companies in the U.S. | walmart.com: "... Walmart to acquire Jet for approximately $3 billion in cash, a portion of which will be paid over time. Additionally, $300 million of Walmart shares will be paid over time as part of the transaction ... Walmart and Jet will maintain distinct brands, with Walmart.com focusing on delivering the company’s Everyday Low Price strategy, while Jet will continue to provide a unique and differentiated customer experience with curated assortment."
• Baidu Is Bringing Intelligent AR to the Masses | technologyreview.com: "... Chinese Internet giant Baidu [baidu.com] has announced a new AR platform that will allow people to make use of the technology from within many of the company’s own apps. The system, called DuSee, is claimed to make use of "sophisticated computer vision and deep learning" to “understand the 3-D environment, and create virtual objects that have rich interactions with the user and the real world.” The platform seems to sit somewhere between basic AR systems, like those used in Pokémon Go, and more advanced technologies, such as Google’s Tango."
• Google Under Antitrust Scrutiny in South Korea | WSJ.com: "Issue appears to revolve around the pre-loading of Google apps on Android smartphones"
• High-Frequency Trading Is Nearing the Ultimate Speed Limit: "A network switch made by the firm Metamako allows a trade order to be placed in the time it takes a photon to travel about 90 feet."
• The bandwidth bottleneck that is throttling the Internet | Nature.com: "... with global Internet traffic growing by an estimated 22% per year, the demand for bandwidth is fast outstripping providers' best efforts to supply it ..."
• Google isn’t safe from Yahoo’s fate | TechCrunch.com: "Google in 2016 = Yahoo in 2000? It’s possible ... Beneath the clean upward trajectory of Google’s success, the digital advertising industry that it has long ruled over has fallen into turmoil and rapid change. It’s not clear if Google’s advertising business will sustain its dominance." See also: Bill Maris, the CEO and founder of Google Ventures, is leaving | Recode.net: "Maris would be the third high-ranking executive to depart from the Alphabet units outside of the main Google search business in recent months, as the tech giant continues to stumble through the transition into its new corporate structure." And this: Google Alphabet report card | BusinessInsider.com: "Alphabet lost $859 million on these 'Other Bets' companies in Q2, versus losses of $660 million at the same time last year."

• Q2 2016 Earnings Releases / Webcasts wrap-up:

• Yahoo YHOO July 18 (note: $YHOO not on Q3 2016 coverage list due to sale of assets)
• Apple AAPL July 26
• Twitter TWTR July 26
• Facebook FB July 27
• Alphabet GOOG July 28
• Amazon AMZN July 28
• Neustar NSR July 28
• Verisign VRSN July 28
• GoDaddy GDDY Aug 3
• Web.com WEB Aug 4  (note: $WEB not on Q3 2016 coverage list due change in focus)
• Rightside NAME Aug 9
• Alibaba BABA Aug 11 (note: $BABA will remain on the Q3 2016 coverage list)

• Five most popular posts (# of pageviews Sun-Sat) this week on DomainMondo.com:

1. News Review 07Aug: ICANN Wins Appeal on ccTLDs But Castigated in IRP Loss
2. Alibaba Group $BABA Q2 2016 Earnings Results, LIVE Webcast Replay
3. Benefits of Brexit, How UK's Brexit Ministers Plan To Leave The EU (video)
4. New gTLD WEB Loser, Ruby Glen, Files Amended Complaint vs ICANN
5. Rightside $NAME Q2 2016 Financial Results, LIVE Webcast Replay

Readers - top 3 countries: 1. U.S.; 2. Germany; 3. France.

•  10 Other Reading Recommendations:

1. Oil traders bid farewell to Yahoo Messenger | SeekingAlpha.com: "Yahoo is shutting down its "legacy" Messenger platform, the main tool used by oil traders to communicate since the late 1990s. The follow-up version of the messaging service cannot be used by the industry as it doesn't meet compliance standards like saving conversations."
2. There's More Than One Way to Publish. I Know. I Tried Many of Them | publishersweekly.com: "An author discusses the publishing options she’s tried: traditional, self-, and, for her sixth book, Amazon ... in its first month, despite its limited bookstore availability, I have sold more copies of In Twenty Years than I did of my third and fourth novels combined. In Twenty Years has been well reviewed, but I have not madly tap-danced on social media, and I have not slowly spiraled into crazy worrying about promotion ..."
3. China is flooding Silicon Valley with cash. Here’s what can go wrong. | WashingtonPost.com: In China, where there’s less rule of law, a powerful government relentlessly pushing for growth, and enormous competition among companies, brass-knuckled business tactics are more common, said Thilo Hanemann, an economist at the Rhodium Group. “... reflections of cultural norms of how business is conducted in China. The Chinese investor may ask for terms that would be considered overly aggressive in Silicon Valley, but these terms would be considered fair in China,” said Connie Chan, a partner with the venture capital firm Andreessen Horowitz.
4. The Dirty Little Secret of Finance: Asymmetric Information | Bloomberg.com: "... financial markets ... [are] driven by differences in how much people know. ... asymmetric information ... It’s key to the way traders, including high-frequency traders, make their profits. And it’s probably at the root of why markets break down and crash."
5. Interview With A High-Frequency Trader | ZeroHedge.com: High-frequency trading (HFT)–thousands of algorithmic-driven market transactions per second–now accounts for over 60% of all trades on American exchanges". How does HFT affect retail investors? "... Supporters claim that high-frequency traders (HFTs) are a net-positive market force because they provide liquidity and tighten bid-ask spreads. They say that high-frequency trading is rarely if ever used for nefarious purposes, and regulators make sure of it. On the other side, detractors claim that HFTs regularly manipulate unaware investors and otherwise destabilize markets. They say that HFTs are a net-negative force on the market and should be reined in ..."
6. Why even the best investing advice may be wrong | MarketWatch.com: "Just think back to the Brexit vote, when a bunch of economists and market observers said things would get ugly fast in Europe. Instead, the market took a knee-jerk quick slide down — just enough for some of those pundits to claim they were right — before jumping off to new highs."
7. Why China is Supercharging Dissident Trials | WSJ.com: "... In recent years, the government left maneuvering space for activists to pursue causes that do not have direct political implications. They did this, in part, to provide a safety valve for the letting off of social pressure. The trials last week and the accompanying propaganda offensive signal that the government has changed its mind ..."
8. Clinton & Establishment Media Anti-Trump Narratives: Are all those 'Trump controversies' raising doubts in Trump Nation? Not really | LATimes.com: "... Cervantes doesn’t think Trump will start deporting or monitoring law-abiding Muslims. He’s close friends with a Syrian American family and would never want to see them harmed. “I just think the ones coming in should be screened extremely well,” he said ... the thought of a Clinton presidency overshadows any of Trump’s flaws in his mind ..."
9. Every Number Tells a Story | FarnamStreetBlog.com: “Yet numbers also revealed abstract patterns,” writes Alex Bellos in his fascinating book The Grapes of Math: How Life Reflects Numbers and Numbers Reflect Life, which, he continues, “made them objects of deep contemplation."
10. Advice for Startups: "Multi-tasking isn't a thing, switching costs are huge, do one thing at a time and do it really well. Find a way to block out interruptions ... Read every essay Paul Graham has written ... Everyone has a hidden stash of domains they've never used ..."--Ben Dixon in What I'd tell myself about startups if I could go back 5 years. See also: Read This Before Naming Your Startup | thenextweb.com.

-- John Poole, Editor, Domain Mondo 

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News Review: Brexit, ICANN56, Chinese Domainer Advice, $NAME in Play?

Domain Mondo's review of the past week and look ahead [pdf]:

The headline above gives you an indication of how much there is to cover this week, starting with the most important story first, the Brexit vote in the UK to leave the EU. First thing to note is that while the experts, insiders, and establishment, including news media, financial media, gurus, pollsters, and bookies, got it "all wrong" and are still getting it wrong, (even some leaders of the "Leave" movement were surprised by the outcome), readers of Domain Mondo were given a forewarning of this outcome before voting started on June 23:

The June 23rd referendum on whether UK will leave or remain in the European Union (EU), may be the global watershed event of 2016 and it is in the hands of the voters in the United Kingdom. A lot is at stake beyond just British sovereignty vs. EU bureaucracy in Brussels. Brexit: Will UK Vote to Leave or Remain in the European Union? (emphasis added).

There is a lot more to come in this drama beyond just the voting results. It is now clear that Boris Johnson and David Cameron are "on the same page" and there will be no immediate trigger of Article 50. Instead, the clever British intend to use the leverage of their voter mandate to squeeze the EU aristocracy for concessions that will give the UK almost everything it wants, and a status no other country, in or out of the EU, now has. A lot of money was made this week if you got in and out on the right side of the Brexit trades. For more, start with Day After Brexit Vote Eurocrats Lost, Market Recovery, Path Forward, which has links to the other Brexit posts on DomainMondo.com.

• ICANN56 | Helsinki, Finland, begins Monday June 27, and ends Thursday, June 30, 2016. It will be a new meeting format ("B"- Policy Forum / new meeting strategy) with a focus on  SO/AC/SG/C policy work and outreach. There will be no welcome ceremony, nor high-interest topics, nor public forum, nor public board meeting, nor sponsor exhibition area. The next Domain Mondo post will contain more information with ICANN56 meeting links. On Sunday, June 26, there is an all day CCWG-Accountability Face to Face Open Work Session in Helsinki, 5:30 - 14:00 UTC | time zone converter | local Helsinki time: 8:30 AM - 5:00 PM EET | Agenda here. Participants and observers may attend online via https://icann.adobeconnect.com/hel56-halla and via English audio http://stream.icann.org:8000/hel56-halla-en.m3u or low bitrate http://stream.icann.org:8000/hel56-halla-en-lo.m3u.

• ICANN-commissioned Study Finds Increased Awareness and Trust in Domain Name System | ICANN.org (June 23, 2016): ICANN selected and paid a vendor to produce a largely self-justifying (for ICANN) report that "Finds Increased Awareness and Trust in Domain Name System." Read the report (pdf) for more. On the other hand, if you are interested in the truth, listen to a wise Chinese domainer:

Warning and advice from a Chinese domain investor | coreile.com: "... (3) Stick to meaningful .com names as their values will continue to rise.  cn, net, and org are OK as they will survive. But, beware of other ccTLDs and new gTLDs as they can be manipulated by registries and big money funds ..."

•  $NAME in Play? Rightside® Issues Press Release to Respond to Donuts Proposal (NASDAQ: NAME) June 24, 2016: "Rightside Group, Ltd. [rightside.co] ... confirms receipt of an unsolicited, non-binding proposal from Donuts Inc. [donuts.domains] to acquire Rightside's entire registry of [new] generic top-level domains [40 new gTLDs total] and related assets [backend registry services operation?] for $70 million in an all-cash deal. Rightside appreciates Donuts' interest in these assets ... The Company's Board of Directors and management team remain committed to maximizing long-term shareholder value and as such they will evaluate any proposal to determine whether it is in the best interests of the Company and its shareholders" (emphasis and links added). Rightside ($NAME) shares closed down 1% at $9.13 Friday, June 24, 2016.

Assuming this is not a publicity gimmick, one way to look at this is privately-held Donuts is offering (70/40) $1.75 million per new gTLD, and related assets, which is more than the $1.25 million per new gTLD that Daniel Negari, CEO of  XYZ.COM LLC, offered in this blog post for just 4 of Rightside's "under-monetized new gTLDs (generic top level domains)." XYZ's offer was not accepted by Rightside. None of Rightside's new gTLDs have set the world on fire. Rightside's brands include Namejet (co-owned), Name.com, and eNom (2nd largest registrar) registrar services.

I have not done an in-depth analysis of this offer nor Rightside's ($NAME) valuation, but current market capitalization of $NAME is $175,296,831. Strip out the new gTLDs and related assets, and Donuts, in essence, is valuing $NAME's remaining assets (registrar services and ownership interest in Namejet) at $105 million (based on current share price). If Donuts has sufficient cash, it could leverage its cash with debt or participation by others (e.g., hedge funds, private equity), to buy all of Rightside and then sell or spin-off the non-newgTLD assets (Namejet and registrar services eNom, Name.com).

In terms of total number of new gTLDs, Donuts is the largest new gTLD registry operator (almost 200 new gTLDs now available), and utilizes Rightside's backend registry services, giving it a compelling need to buy all of Rightside's new gTLDs operation (which Rightside wouldn't otherwise sell off in pieces). Donuts' clear frustration with Rightside management can be read in the Donuts press release. Rightside has been losing money, see Rightside $NAME Q1 2016 Earnings Webcast, May 10, 2016, but with "over 16.6 million total domains under management as of March 31, 2016, including over 2.9 million domain names registered through its retail outlets, Rightside remains one of the world's largest registrars." As Donuts pointed out, its "all-cash offer of $70 million represents approximately 40% of Rightside's current market capitalization to acquire assets that contribute approximately 5% of its [Rightside $NAME] revenue."  Donuts further noted, Rightside pays approximately 43% of  its registrar's revenue to VeriSign (.COM, .NET), and earns approximately 20% of its registry's revenue from registrar competitor, GoDaddy.

As a publicly traded company, Rightside ($NAME) is vulnerable to a hostile takeover. The majority of Rightside shares are held by institutional shareholders (55.94%), of which the 3rd largest shareholder is activist investor J. Carlo Cannell (Cannell Capital LLC), who earlier this year wrote to Rightside's Board Chairman: "... NAME [Rightside] is holding back the growth potential of your registrar by pushing garbage extensions [new gTLDs] to a user base that quietly knows better ..." The directors of a publicly traded company owe fiduciary duties (pdf) to maximize shareholder value.

Since Rightside management has not indicated a willingness to spin-off or sell $NAME's new gTLDs and backend operations, one or more aggregate offers for the whole company, at a premium over the current market price, might be necessary for Donuts to acquire the specific parts it wants. The possibilities of where this might lead are endless. Every player in the domain name industry may want to take a look at this, including even Verisign (as a financing source for the acquirer of the registrar operations since it is prohibited from running a registrar operation).

This could turn into the "deal of the year" in the domain name industry with more than one buyer dividing up "the spoils." [Disclosure: In accordance with Domain Mondo's Disclaimer policy, I do not have any current position, long or short in Rightside shares ($NAME), but may take one or more positions, long or short, in the near future.] UPDATE June 27, 2016: See this June 27th article by Bram de Haas: Donut Panic! - Rightside Group, Ltd. | SeekingAlpha.com and also my News Review [Jun19]: ICANN, New gTLD Domain Names, Consumer Fraud which specifically deals with the paper Mr. Haas cites as proving "the value of gTLDs." UPDATE July 3, 2016: See [News Review 03 July 2016]--$NAME in Play? follow-up.   

•  In the IANA Stewardship Transition proposal, a new, separate legal entity, Post-Transition IANA (PTI) is to be formed as an affiliate of ICANN, to perform the IANA functions post transition. The following graph is an excerpt from the draft Implementation Plan currently under review at ICANN, to depict the post-transition state:

Excerpt from the draft IANA Transition Implementation Plan currently under review at ICANN

•  IANA Stewardship Transition Implementation Planning Update (Volume 3) | ICANN.org: 20 June 2016: "Root Zone Maintainer Agreement (RZMA) Status update: ICANN and Verisign are working to finalize the last outstanding details of the RZMA. The agreement will be posted for public review once it is finalized."

•  ICANN and Diversity, AFNIC report (pdf)--Afnic reveals figures on diversity within ICANN | afnic.fr--No surprises here, ICANN is made up mostly of English-speaking, North American, males, and "Europe, Australia and New Zealand also benefit from strong representation." Unfortunately, the report doesn't even mention the fact that the vast majority of domain name registrants don't have any stakeholder group representation in the GNSO, while corporations have two stakeholder groups in the GNSO--IPC and Business Constituency. But of course we all know ICANN's GNSO is broken and out-of-balance.

The AFNIC (France) report, also points out "the predominance of English speakers is very strong with almost 2/3 of ICANN leaders having English as their mother tongue, which differs greatly from the global population." However, what the report does not note is that unlike any other language in the world today, there are now many more non-native English speakers than native English speakers (by a 3 to 1 ratio according to linguist David Crystal), and that will most likely continue for the foreseeable future. Adding native + non-native speakers, English is the most commonly spoken language in the world, yes, even more than Mandarin (which has the largest number of native speakers).

•  9:00 a.m. Tuesday, June 28, 2016 is the deadline given for  NTIA's Larry Strickling to respond to the June 21, 2016, letter (pdf) from U.S. Senators Cruz, Lankford, Lee and Congressman Duffy, "regarding your agency’s apparent violation of federal law in using federal funds to relinquish its responsibility with respect to Internet domain name system functions, including responsibility with respect to the authoritative root zone file and the Internet Assigned Numbers Authority functions."

•  U.S. Secretary of Commerce Penny Pritzker Stresses Importance of an Open Internet to Economic Growth, Free Expression in Remarks at the OECD Ministerial Meeting | Commerce.gov: "The strongest voices for government control often come from countries that censor content and limit access to information. The Internet is the greatest platform for free expression and innovation ever known. Shifting control to an international governmental body would leave the Internet vulnerable to geopolitical disputes and endless bureaucratic delays. It would also chill innovation and slow the expansion of Internet access worldwide – depriving billions of people access to the currency they need to thrive in the 21st century. We must ensure that the Internet remains accountable not to governments, but to the people, consumers, institutions, and companies who depend on it. Our Administration is committed to this transition." (emphasis added)

• The most popular country-code (ccTLD) top-level domains under the Uniform Domain Name Dispute Resolution Policy (UDRP) is .CO, ccTLD for the nation of Colombia in South America. Why? "The answer is probably obvious: .co is the top-level domain name that is most similar to .com," says attorney Doug Isenberg, read more: The Popularity of .co (not .com) Domain Name Disputes | circleid.com.

• Are there too many new gTLDs? A free market should take care of that, but it will take time, provided ICANN sticks to its original plan to "let the market decide winners and losers" which, unfortunately, ICANN GDD President Akram Attalah and his staff are now trying to subvert by changing policy and "granting fee waivers" to failing new gTLDs--see comments to ICANN's proposed Registry Agreement change. This is basic economics: 

"[A]re there too many products? The market eventually manages to sort out and clear away those funds that investors deem unnecessary. It may take a long time, as we have seen with the abundance of actively managed funds that are overpriced and underperform ..."--Wall Street Tries Out Lots of Shiny New Objects | Bloomberg.com

Once ICANN chose to unleash over 1000 new gTLDs onto a market of less than 20 gTLDs available for public registration, there were bound to be failures, and consolidation of the industry. The losers, other than the failing new gTLD registry operators, will be the domain name registrants who pick the "wrong" new gTLD domain extension for registration of their business name. But, as I said last week, ICANN doesn't care about end users, consumers or domain name registrants. For ICANN, and its new gTLD 'partners,' "it's all about the money."

•  ICANN Loses Again in new gTLD AFRICA litigation: On June 20, 2016, the U.S. District Court denied ICANN's motion for reconsideration of the Order enjoining ICANN from delegating new gTLD .AFRICA. Read more here.

•  Turkey's internet censorship: "The Venice Commission of the Council of Europe (CoE) has recommended that Turkey’s government review its law on the internet which allows its telecommunications authority to block websites for “illegal or unsafe” content such as piracy, pornography or terrorism without any authorization from the government or a legal office..."--Venice Commission urges Ankara [Turkey] to review internet code | hurriyetdailynews.com.

•  Weak Corporate Governance is a problem, and not just at ICANN: My Problem With Alibaba (NYSE:BABA) | SeekingAlpha.com: "Perception that company attempted to hide rumors of counterfeiting points to transparency issues that are indicative of larger corporate governance issues. Weak corporate governance is preventing Alibaba from being a great stock to own." $BABA, domains include: AlibabaGroup.com; Alibaba.com.

•  Five most popular posts (# of pageviews Sun-Sat) this week on DomainMondo.com:

1. News Review [Jun19]: ICANN, New gTLD Domain Names, Consumer Fraud
2. Brexit Vote Results LIVE, UK Votes to Leave EU, What Happens Next?
3. Brexit: Will UK Vote to Leave or Remain in the European Union? (video)
4. China's Economy Hard to Fix, George Soros Expects Hard Landing (video)
5. Neustar $NSR Decides to Split the Company, Investor Webcast Replay

• 8 Other Reading Recommendations:

1. A green light for police: The Supreme Court weakens the guarantee against unreasonable searches | Economist.com: America’s Bill of Rights bars “unreasonable searches and seizures”. As a result, when police obtain evidence of a crime through illegal means, that evidence is inadmissible in court. But a 5-3 Supreme Court ruling introduces a loophole which could allow police to stop someone on no grounds, check for existing warrants and then legally conduct a search. This interpretation is bad for liberty and will disproportionately affect minorities. 
2. Guardian Media Group to cut 250 jobs in bid to break even within three years | Media | TheGuardian.com: "Print advertising fell sharply in the year by an estimated 25%, and although the Guardian beat this market average, the decline was not offset by digital revenues."
3. 3 Leaders at the Metropolitan Museum of Art Step Down | NYTimes.com: "the Met’s digital team will specifically focus on digitizing its collection for a global audience. “The only way for the Met to succeed in the future is to continue to build the connection between the physical and the digital,” Mr. Sreenivasan said."
4. How Many Law Schools Need to Close? Plenty | charleshughsmith.blogspot.com: "The only solution for the surplus of workers with law degrees is a massive, permanent reduction in the issuance of new law graduates."
5. Hackers would like to join your LinkedIn network - and you'd probably accept them | ZDNet.com
6. Can a Social-Media Algorithm Predict a Terror Attack? | technologyreview.com: "... Neil Johnson, a physicist at the University of Miami, and his team focused on a Russia-based social platform called VKontakte [vk.com], which boasts 360 million users worldwide ..."
7. How To Brainstorm Like A Googler | FastCompany.com: "... we’ve created a linear process for brainstorming new ideas and turning them into actual products: 1) Know the user 2)Think 10x 3) Prototype"..."
8. A new chapter in YouTube’s live stream | youtubecreator.blogspot.com: "... YouTube mobile live streaming will be baked right into the core YouTube mobile app. You won’t need to open anything else, just hit the big red capture button right there in the corner, take or select a photo to use as a thumbnail, and you can broadcast live to your fans and chat in near real time ..."

Have a great week!

-- John Poole, Editor, Domain Mondo

feedback & comments via twitter @DomainMondo
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