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Resolved, (2010.11.05.02), the Board directs the CEO to include the following principles relating to registry-registrar cross-ownership in the forthcoming version of the Applicant Guidebook.
1.ICANN will not restrict cross-ownership between registries and registrars. Registry operators are defined as the registry operator and all other relevant parties relating to the registry services.
2.Registry agreements will include requirements and restrictions on any inappropriate or abusive conduct arising out of registry-registrar cross ownership, including without limitations provisions protecting against:
a.misuse of data; or
b.violations of a registry code of conduct;
3.These provisions may be enhanced by additional enforcement mechanisms such as the use of self-auditing requirements, and the use of graduated sanctions up to and including contractual termination and punitive damages.
4.ICANN will permit existing registry operators to transition to the new form of registry agreement, except that additional conditions may be necessary and appropriate to address particular circumstances of established registries.
5.ICANN will have the ability to refer issues to relevant competition authorities.
6.ICANN will have the ability to address possible abuses that may arise out of registry-registrar cross-ownership through the consensus policy process.
What do you believe to be the profound implications?
George Sadowsky noted the reason for his opposition was that he thinks this is the wrong way to go and he believes there will be very unpleasant, unintended consequences. However, George noted that he participated in the discussion and drafting of the Resolution to make the Resolution as good as it could be. George noted further:
"I oppose this motion on several grounds. First, the resolution makes a very significant change in relationships between registrars, registries, and registry service providers. It will drastically change both the current dynamics of the domain industry and the way in which it will evolve. This change will be introduced concurrently with a major expansion of the gTLD space, and we cannot predict with any certainty the effects of either change, much less the combination.
"Second, the significant extent of this change makes it irreversible for all practical purposes. If unintended consequences appear that make it advisable to re-introduce some separation between parties, it will be impossible to do so without major disruption of the players in this industry.
"Third, in spite of the measures to be taken to ensure "good conduct," the resolution has the potential to commingle all of the data, public and private, regarding a registry in one place, providing the possibility of easy and invisible sharing of data within a merged or co-owned entity regardless of the scope of any agreement with ICANN.
"Such sharing is likely to be undetectable given the close affiliations among the entities. Data now forbidden to be shared between registries and registrars will be shared. Both auditing and enforcement by ICANN are unlikely to be effective, all the more so as we move from 20+ to hundreds of new gTLDs.
"Finally, a combined registry-registrar having the possibility of data sharing will have more market power than otherwise. Assuming that each gTLD registry must continue to treat all registrars equally, the real benefits of vertical integration are largely illusory, but those that can be easily obtained by the officially forbidden sharing of data are real.
"The removal of restrictions to vertical integration embodied in this resolution is unnecessary, and goes counter to both the interests of registrants and the global public interest."