ICANN Is Violating Its Legal Agreements with the U.S. Government — Who’s Next?

In April, I published an article on CircleID, The Multistakeholder Moment of Truth: Will Stakeholders Hold ICANN Accountable?, pointing out that ICANN is violating its legal agreements with the U.S. Government — namely the InterNIC licensing agreement and merged Memorandum of Understanding. At that time, I warned that it is essential for stakeholders not to remain silent in the face of this transgression, “hoping that such behavior left unchecked will end of its own accord.”

Why?

Well, ICANN purportedly is doing two things: coordinating policy development for the Internet’s Domain Name System (DNS) and entering into contracts with registry operators, registrars, and others for the technical management of the Internet’s core infrastructure. In addition to registry agreements with massive legacy registry operators — including Verisign for .com and .net and the Internet Society’s (ISOC) Public Interest Registry for .org — ICANN maintains contracts with operators for more than a thousand other Internet registries as well as with thousands more registrars that are serving Internet users directly with retail domain name registration services -- most of which are small and medium-sized businesses.

Therefore, the simple and unavoidable question is this:

If ICANN cannot be trusted to honor its contracts when the counter-party is the most powerful sovereign in the world — the U.S. government — then how can any registry operator, registrar, or other party to an agreement with ICANN have faith that it is worth more than the paper that it’s written on?

Legacy registry operators have an unbeatable leg up in the ICANN influence game because they are rich, powerful, and have been around a long time (Full disclosure: I have worked two separate times (2009-2010 & 2013-2016) in senior policy roles at Verisign). As a result, they enjoy outsized influence not just from longtime relationships but also from “soft power” afforded them by having the resources to pay special assessments to ICANN. There is also the implicit threat of litigation which legacy registry operators and a small number of registrars can credibly wield because they are able to absorb the associated costs more easily than smaller contracted parties — a threat which needn’t be overt or explicitly made in order to be potent.

But what about the hundreds of companies — large and small — that are contracted to operate registries and thousands of others that are accredited registrars? How about the potentially thousands of new registry operators that may enter into contracts with ICANN as part of any new round of generic top-level domain name registries?

Perhaps more significantly, what about the investors in these brave entrepreneurs seeking to build viable businesses based upon contracts with ICANN?

Generally speaking, businesses and their investors value enforceable contracts. So why is anyone confident enough to rely on contracts with an organization that is so fickle and unreliable that it violates its agreements with the U.S. government blatantly and with impunity as ICANN is doing and has been for years?

Considering how plainly seen these contract violations are, no contracted party — or its investors — can remain silent and later credibly claim surprise when ICANN arbitrarily ignores terms of an agreement with them or seeks to collect additional money in exchange for performance.

But when this happens then what recourse does an aggrieved contracted party have but expensive litigation or to follow the example being set by the U.S. government and ignore the transgression? The latter is an unrealistic, if not potentially disastrous, approach since the U.S. government isn’t dependent on its contracts with ICANN for revenue but contracted registry operators and registrars are.

We can know the result of complaining to ICANN and its stakeholder community or trying to work within the ICANN complaints and appeals process: a long, lonely, and costly ordeal that most closely resembles running a medieval gauntlet where the final outcome is uncertain and includes the possibility of sudden death while the only sure thing is that it will be painful.

History suggests that the inevitable consequences of leaving circumstances such as these unaddressed is an unrecognizable mess that mirrors a Stalinist bureaucratic nightmare. Contracts are meant to be enforced as written and every single contracted party has a fundamental and vested interest for ensuring that ICANN fulfills its contractual obligations — in spirit and to the letter — in each and every instance, regardless of whether they are party to the specific agreement being violated or not.

Period, full stop.