Who Is Really Behind the Plan to Block .Web? (original) (raw)

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In May of this year, I questioned whether the continued legal maneuvering of a company called Altanovo Domains Ltd. (Altanovo) could further delay the launch of .web. After reading its second Independent Review Process (IRP) complaint, and ICANN’s response, it seems that the unfortunate answer is a resounding “yes,” or at least that is Altanovo’s intent.

While Altanovo is seemingly the company behind these efforts, there is a lack of publicly available information regarding who is really behind Altanovo’s delaying tactics. That lack of transparency is important, including to the community, as several companies and individuals appear to be working together to block .web from ever reaching the market in order to limit competition against them.

In late October, ICANN published Altanovo’s second IRP complaint. On its face, it is nothing more than a repeat of the meritless allegations against NDC and Verisign that were rejected previously. This new complaint is based on the same allegations already rejected by the first IRP panel, ICANN’s Board Accountability Mechanisms Committee, and by the full ICANN Board, and seeks exactly the same remedy as did the first, namely, to award .web to Altanovo. This second IRP could serve no legitimate purpose, because the first IRP panel not only rejected Altanovo’s request once, but then went on to sanction Altanovo when it asked for a reconsideration, declaring Altanovo’s request “frivolous” and “having no sound basis.” Despite this, Altanovo is trying a third time to get a panel to invalidate the award of .web to NDC.

ICANN’s response to Altanovo’s latest IRP aptly characterizes the complaint’s utter lack of merit:

After an exhaustive First .WEB IRP, and an extremely thorough evaluation process following that IRP, ICANN determined that NDC did not violate the Guidebook or the Auction Rules. ICANN fully complied with its Articles, Bylaws, and internal policies and procedures when it made that determination, and the Board’s resolution is entitled to deference under the Bylaws’ enshrinement of the business judgment rule. Accordingly, Altanovo’s IRP Request should be denied.

There is nothing else for a new (repeat) IRP to decide.

However, certain statements about NDC in Altanovo’s complaint are especially curious. On page 4, for example, Altanovo stated that NDC was “a special purpose vehicle, the ultimate owners of which Altanovo has not been able to ascertain.” In a footnote, Altanovo repeated its claim that it “has not been able to ascertain [NDC’s] ownership.”

But NDC’s ownership and control are well understood, having been examined several times, including by ICANN, with no remaining questions. The first IRP panel specifically rejected Altanovo’s claims that ICANN violated its Bylaws by the manner in which it investigated and resolved Altanovo’s allegations regarding NDC’s ownership and control.

Altanovo’s statements are further curious because the true ownership and control of Altanovo itself has never been made public and appears intentionally hidden behind an opaque structure of interrelated companies. Altanovo Domains Ltd., which says it controls the .web application, is only one of at least seven interconnected entities formed in Delaware, Ireland and California in the last few years. The full ownership roster for these entities has been kept secret. The identity of the individuals who actually own Altanovo Domains Ltd., and thus effectively control the efforts to keep .web off the market, has been obscured from public knowledge. These individuals have continued to orchestrate the baseless legal challenges against the delegation of .web from the shadows.

What is clear is that these seven entities were formed when Donuts (now called Identity Digital)—like Afilias (now called Altanovo), a losing bidder for .web—purchased Afilias’s registry business. It may well be that the shareholders of Afilias obtained ownership stakes in Donuts’ entities, and/or that the owners of Donuts took stakes in the Altanovo entities that claim to control the .web application. What has become clear, however, is that Ethos Capital, the controversial private equity fund whose attempted takeover of .org was rejected by ICANN, has become the new majority owner of Donuts.

Disclosing those who own the entities that intertwine Donuts-Ethos/Afilias-Altanovo would reveal to the community who is actually behind the years-long coordinated efforts to keep .web from being introduced to the market.

In what appear to be carefully coordinated actions, Donuts initiated an unsuccessful lawsuit against ICANN in 2016 to delay .web and demanded at least 22.5million—itsshareoftheexactamountAfiliasbidfor.web,whichtheyintendedtobeDonuts’compensationforlosingtheauction.DonutsandAfiliasagreedtoworktogether,alongwithothers,todividetheproceedsoftheauctioninadvance,offeringtopaysomebiddersmillionsofdollarstopurposefullylosetheauction,ananticompetitiveschemetocontrolthepriceandultimatewinnerofthe.webauction.AfiliasattemptedtoinduceNDCtoparticipateinthisschemebyofferingmorethan22.5 million—its share of the exact amount Afilias bid for .web, which they intended to be Donuts’ compensation for losing the auction. Donuts and Afilias agreed to work together, along with others, to divide the proceeds of the auction in advance, offering to pay some bidders millions of dollars to purposefully lose the auction, an anticompetitive scheme to control the price and ultimate winner of the .web auction. Afilias attempted to induce NDC to participate in this scheme by offering more than 22.5million—itsshareoftheexactamountAfiliasbidfor.web,whichtheyintendedtobeDonuts’compensationforlosingtheauction.DonutsandAfiliasagreedtoworktogether,alongwithothers,todividetheproceedsoftheauctioninadvance,offeringtopaysomebiddersmillionsofdollarstopurposefullylosetheauction,ananticompetitiveschemetocontrolthepriceandultimatewinnerofthe.webauction.AfiliasattemptedtoinduceNDCtoparticipateinthisschemebyofferingmorethan17 million—a clear violation of ICANN’s rules. NDC refused to participate in Afilias’ scheme. When Donuts’ and Afilias’ efforts to rig the auction failed, and Donuts’ 2016 litigation also failed, Afilias picked up the baton to delay .web and has been running with it ever since, even after Afilias exited the registry business.

Equally concerning, Altanovo stated that its financial losses exceeded its assets in its public financial filings, while quickly adding that its “directors were confident that the Company will be able to continue in existence due to the availability of support from an associated company.” The only business of Altanovo appears to be the litigation involving .web. Its litigation bill for the first IRP was over $10 million and the cost of the second one may be just as high. If Altanovo cannot pay its own litigation bills without obtaining funding from an unidentified “associated company,” one has to ask—who exactly is benefiting from the delay in the delegation of .web, and who has the incentive to pay to keep .web off the market? The history here tells us that Donuts and Afilias, now Identity Digital and Altanovo, started working together to fix the price at which .web would be acquired years ago, and both continue to benefit by keeping .web off the market today.

While Altanovo is again raising baseless questions about the ownership of NDC (proven to be baseless according to the first IRP panel and the ICANN Board), the community should be keen to unmask and make transparent the real sources of ownership, control, and funding for Altanovo and its repeat IRPs whose only real goal seems to be to keep .web from entering the market and being available to consumers.