A surprise decision was made by the ICANN’s Board of Directors this week. The ICANN Board voted to allow new gTLD registries to own registrars, opting not to create new rules prohibiting registrars from applying for or operating new gTLD registries. This issue known as “Vertical Integration” or “Cross Ownership” has been the most contentious non intellectual property related matter surrounding new gTLDs.
After more than two years of intense community discussions and debate in the ICANN community and a distinct lack of consensus within the GNSO, the Board made their decision to allow registries to own registrars and registrars to own registries. ICANN has gone on record that this decision was made after considering expert economic advice, community comments, and numerous proposed approaches to registry-registrar cross ownership.
Under the Board resolution additional enforcement mechanisms have been added. New gTLD registry agreements are to include:
(1) a Code of Conduct prohibiting any misuse of data or other abusive conduct arising out of registry-registrar cross-ownership;
(2) robust auditing requirements;
(3) graduated sanctions up to and including contractual termination and punitive damages; and
(4) ICANN’s right to refer competition issues to appropriate government competition authorities.
The ICANN community has also been discussing whether to continue, expand or remove the restrictions in current registry agreements that limit the existing registries from owning more than 15% of a registrar.
With this decision on Registry-Registrar Integration for New gTLDs, we anticipate that the registry-registrar landscape will change dramatically over the next several years.