Thu 4. Jul 2024, 10:15
Do the internet administration ICANN and VeriSign Inc. form a de facto cartel that leads to excessive profits? This is what a consortium of three interest groups claims and has called on the US government to prevent the extension of the "Cooperative Agreement" with the US Department of Commerce.
In a letter dated June 26, 2024, the American Economic Liberties Project, the Demand Progress Education Fund and the Revolving Door Project wrote to both the US Department of Justice and the National Telecommunications and Information Administration (NTIA) urging them to end the government-imposed monopoly between ICANN and VeriSign under the Cooperative Agreement. Since the 1990s, the NTIA has allowed ICANN and VeriSign to raise prices for .com domains and abuse their monopoly by eliminating necessary price caps and introducing automatic no-bid contract renewals. Because of its monopoly position, VeriSign has raised fees for .com domains, the gold standard for commercial websites, from US$6 during the George W. Bush administration to US$10.26 today - an increase of more than 70 percent. This allows VeriSign to make excessive profits without offering a better product or service. Previous administrations have set a price cap; however, under President Donald Trump, the NTIA has lifted the cap on the maximum allowable price and allowed VeriSign to potentially increase fees by seven percent per year in four out of six years, with no strings attached. VeriSign's financial figures and the importance of .com domains would indicate that the company does indeed hold a monopoly and has considerable market power. VeriSign has a "gross profit margin" and an "operating margin" of almost 90 and 70 percent respectively. The company is buying back shares and had substantial free cash flow of US$ 925 million at the end of April 2024.
In order to end this "incestuous legal triangle", the NTIA should provide VeriSign with written notice of non-renewal of the Cooperative Agreement by August 2, 2024, in order to terminate the contract completely and initiate the process for an open bidding process on the open market. In the past, this has significantly reduced the wholesale price for domain registrations. The last time .net was the subject of a bidding process, the fees were bid down by almost half from US$6.00 to US$3.50, while .com remained at US$6.27, suggesting that an open bidding process would bring similar benefits today. In addition, the NTIA should introduce a reasonable price cap for the winner of the tender. ICANN, on the other hand, has a vested interest in VeriSign making as much money as possible, as ICANN is paid for each registration. Even if many of these arguments are already known, the last point is debatable: ICANN's interest does not depend on how expensive a .com domain is, but on the fact that as many .com domains as possible are registered, renewed and transferred. If the number of registrations under .com decreases, ICANN's revenues also decrease; this has been the case for several months now and has led to ICANN laying off more than 30 employees, among other things.
VeriSign has sharply rejected the accusations in an initial statement. The letter is based on a fundamental misunderstanding and ignores the clear wording of the Cooperative Agreement, the nature of cooperative agreements, the course of negotiations between the US Department, VeriSign and ICANN, ICANN's role as the central coordinator of the DNS, long-standing US policy and the express terms of the Registry Agreement between ICANN and VeriSign. Should the Department choose to terminate the Cooperative Agreement, .com will continue to be administered under the terms of the Registry Agreement between ICANN and VeriSign to ensure the continued security, stability and resiliency of this critical Internet infrastructure.
The letters can be found at:
https://www.economicliberties.us/wp-con ... 062624.pdfhttps://www.economicliberties.us/wp-con ... 062624.pdfYou can find VeriSign's statement at:
https://investor.verisign.com/node/24591/html