The Insult and Injury of the U.S. Government’s Failure to Enforce ICANN’s Contractual Obligations

Someone recently observed that many stakeholders have fallen victim to a “chilling effect” resulting from fear of retaliation by the rich and powerful bullies currently infecting the multistakeholder community, ICANN, and Internet governance.  I related to what I was hearing because I’ve been personally targeted and libelously attacked and it is deeply dismaying enough having to worry about threats to revenue and reputation along with other harmful effects of such thuggery.  I can’t imagine also having employees and being forced into the “Sophie’s Choice” dilemma of deciding between calling out the multitude of abuses and rampant misbehavior by ICANN and legacy registry operators or remaining silent in order to stay in business and make payroll.  

But this is the choice that is foisted regularly upon many registrars, many of whom are small businesses and privately express deep concern about the consequences of calling out the anti-competitive and predatory misdeeds of the monopolist bullies plundering the public interest DNS.  

The 20th-century moral philosopher Hannah Arendt observed that, “(g)enerally speaking, violence always arises out of impotence.  It is the hope of those who have no power.” Thus, the plain, simple truth is this:  the legacy registry operators inflicting their peculiar form of corporate violence onto small-business owners, entrepreneurs, job creators, creatives, makers, idealists, technologists, investors, and any manner of other stakeholder seeking to make their own contribution for benefit of the public interest Internet — or even just to make a living — are doing so because they know better than anyone else that their illegitimate self-interested stranglehold on our public interest Internet is living on borrowed time.  

Readers can be certain of this because of the simple reality that legacy registry operators are merely contracted parties for operating Internet infrastructure which they did not create and which they do not own.  Therefore, their ability to continue plundering public interest Internet resources depends entirely on a coercive strategy of predatory tactics that are designed to control governance, contracting, and policy-making while also deflecting attention away from the extant legal agreements that are being violated.  Their entire aim is to create an impression that they possess rights when only concession privileges have been conferred. 

Amidst this rotten mess, ICANN is arbitrarily and capriciously violating agreements with the U.S. government.  The InterNIC licensing agreement between the Commerce Department and ICANN — which merges the Memorandum of Understanding by direct reference — prohibits ICANN from being a registrar.  Yet, by its own admission, ICANN is doing precisely that by warehousing and cybersquatting on single-character labels in the legacy Internet registries.  What makes this bad-faith behavior all the more absurd is that this prohibition has been incorporated verbatim into ICANN’s Bylaws and ICANN has cited it previously to support arguments that an antitrust complaint should be dismissed.  In that judicial filing, ICANN stated that, “ICANN’s Bylaws prohibit it from operating as an Internet registry or registrar. ICANN does not sell anything or make anything; its functions are noncommercial and in support of the public interest.” 

If this were true, then ICANN’s iana.org website wouldn’t state that, “(w)e act as both the registrant and registrar for a select number of domains which have been reserved under policy grounds.” Nor would ICANN be engaged in warehousing and cybersquatting on single-character .com labels and further collaborating with Verisign to auction off these labels to the highest bidder in violation of user-based fee restrictions set forth in the NTIA-Verisign Cooperative Agreement, to which both Verisign and ICANN — by virtue of the InterNIC license agreement and merged MOU — are bound.  

The cybersquatting and warehousing of single-character labels in legacy registries is just one glaring example of ICANN’s arbitrary and capricious misbehavior, but there are others.  While these contractual obligations may have motivated ICANN’s rejection of the failed billion-dollar .org registry sale by the Internet Society (ISOC) to Ethos Capital, a close reading of the extant agreements raises questions about whether ICANN improperly acted by removing the consumer pricing safeguards from the .org registry agreement shortly before the .org sale was publicly announced. 

These extant agreements also call into question the entire WHOIS debacle of the last several years — particularly since the InterNIC licensing agreement grants the U.S. government the right to inspect ICANN’s use of its service mark to ensure “proper quality.” Considering the license agreement’s explicit assertions that “the term ‘InterNIC’ is a concept for an integrated network information center that was developed in cooperation with the U.S. Government and provides public information on technical management of the Internet valuable to users worldwide…,” the Commerce Department might want to check in on ICANN’s use of its service mark because the late 1990’s are calling and wants the current internic.org website back.  Regardless, ICANN’s self-deprivation with respect to accurate, complete, and timely WHOIS information should be seen as unacceptably damaging the U.S. government’s InterNIC service mark and not in any way keeping with “proper quality” of WHOIS registrant information that the U.S. government expected to be provided under the guise of InterNIC.  

But an unavoidable part of the problem is that the U.S. Department of Commerce is improperly waiving specific performance of ICANN’s contractual obligations.  This is despite ample and extensive precedent going all the way to the U.S. Supreme Court which unambiguously affirms that the U.S. government may not forego receiving what it is owed from contractual counter-parties. According to the U.S. Government Accountability Office (GAO), “…Article IV (of the U.S. Constitution) requires agencies to have statutory authority before they may ‘dispose of’ their contractual rights to full performance.” In that same 2016 report, GAO listed a plethora of case law precedent which supports this principle while also citing an earlier report from 1965:

The courts have held that once a contractual right has become vested in the United States…to demand performance of a valid and otherwise legal contract,…there exists no authority…gratuitously to waive or surrender such right…. It is a well-established principle of law that valid contracts are to be enforced and performed as written….

While it has been presented — incorrectly and dangerously — that the U.S. government’s laissez-faire approach to oversight of public interest Internet registries somehow serves larger purposes, it cannot be argued that it was “always envisioned” that coercive and predatory anti-competitive corporate bullies would be allowed to shirk their contractual obligations and injure the public interest by their single-minded and self-interested plundering of the DNS.  If ICANN, legacy registry operators, and most especially the malefactors of great wealth which control them both are satisfied with benefitting from such coercive and predatory anti-competitive bullying then they will reap the inevitable consequences of such behavior; if they aren’t then it shouldn’t — and wouldn’t — be happening. 

Governance is a bit like child-rearing in that it’s most effective when it is non-arbitrary.  This is especially true since accountability deficits in one part of a system have derivative downstream effects.  Thusly, if the Commerce Department doesn’t enforce its InterNIC licensing agreement and merged prior agreements with ICANN, then ICANN has no real impetus for enforcing its contracts with registries and registrars, and registries aren’t motivated to enforce their agreements with registrars, and so on.  The entire WHOIS fiasco is prima facie evidence of this phenomenon and which occurs when an entire governance model has become conditioned to believe that contractual obligations are merely suggestions and consequences for non-compliance are just a phantasmagorical bedtime story that profiteering monopolist bullies tell to give everyone nightmares.  

Regardless, I’m not spooked by their ghost tales nor should anyone else be.  This isn’t their Internet — this is our Internet — and enough is enough.