Registry Manipulating Auctions & Exploiting Insider Data—ICANN Refuses to Act

[DomainBanana]

I uncovered troubling practices by a domain registry that’s actively bidding on its own domain names in public auctions. It appears they’re doing this to artificially inflate the perceived value of these domains—a clear manipulation of the market.

Even more concerning, this registry is using insider information (registry-level data) to make investments in other domain names. This gives them an unfair advantage over other domain investors, which is not only unethical but a blatant violation of policies designed to ensure fair competition.

I reported these practices to ICANN, fully expecting them to investigate and protect the integrity of the domain market. To my shock, ICANN refused to take any action, claiming that these practices are “perfectly allowable.”

It’s alarming that ICANN, an organization tasked with maintaining the integrity of the domain name system, is turning a blind eye to such clear violations. These actions undermine trust in the industry and put independent domain investors at a severe disadvantage.

I’m curious—has anyone else experienced or observed similar behavior? How do we, as a community, address this when ICANN refuses to enforce its own policies?

 

[jberryhill]

intelligence that only registries have because of their privileged position as infrastructure operators.

They are certainly not the only ones. If you are looking at, for example, domain availability searches, then you can add in registrars, their resellers and third-party domain information services. If you are looking at traffic to existing domains, then you can throw in hosting providers, parking providers, etc.. If you are looking at DNS queries, you can add in ISPs or anyone who runs an DNS resolver for enough traffic. It's not as if every DNS query for example.tld reaches the .tld registry servers.

So, there are quite a few folks in the internet ecosystem who have access to traffic data for existing and non-existing domains.

You're going to need a bigger boat.

 

[biggie]

people who pick their noses in public and fling boogers on the sidewalk,

Hi

lol, the imagery of it all

still, the OP is doing something similar, by throwing vague ass against the wall, trying to see what sticks

be real and state facts

imo....

 

[DomainBanana]

So, there are quite a few folks in the internet ecosystem who have access to traffic data for existing and non-existing domains.

Your point about other players having access to data actually raises an interesting question:

Why don't we see major registrars using their extensive data to systematically acquire large domain portfolios in the aftermarket?

Perhaps because they understand such behavior could violate their contractual obligations or invite regulatory scrutiny.

Yet here we have a registry - who should be even more neutral than registrars - using their privileged position as infrastructure operators to compete in the market they're supposed to be neutrally administering.

The issue isn't just about who has what data. It's about entities with privileged access using that advantage to compete against regular market participants. The fact that registrars generally refrain from such systematic exploitation of their data access, despite having the capability, suggests this behavior crosses a line - doubly so when it's a registry doing it.

 

[DomainBanana]

Is there a law that prevents Registry operators (which have access to non-public data and privileged information) from operating on secondary market? If there is, you can file a lawsuit. If you are asking the community to pursue this claim with you, I don't think you will get support.

To clarify: This isn't just about what we think 'should' happen - registry operators do have contractual obligations with ICANN regarding how they can use their position and access to data.

The reason I've raised this publicly, even with some details withheld, is that the domain community should be aware this is happening. When registry operators, who are supposed to be neutral infrastructure providers, start competing in the secondary market using their privileged access to data, it affects market fairness for everyone.

I understand the skepticism about vague claims. However, given the potential for retaliation when raising concerns about a registry operator, some level of discretion is necessary at this stage. My goal isn't to rally support for any specific claim - it's to raise awareness that this practice exists and is problematic for the domain ecosystem as a whole.

 

[jberryhill]

Why don't we see major registrars using their extensive data to systematically acquire large domain portfolios in the aftermarket?

I'm not sure why you believe they haven't.

Obviously, I managed the legal issues concerning Frank Schilling's portfolio before he started a registrar, and then later went retail with it as Uniregistry. Eventually, his remaining domain portfolio, along with other clients of mine such as Yun Ye's (which was sold to Marchex), Mike Berkens', etc. were all scarfed up by GoDaddy under their Namefind brand. GoDaddy's portfolio is still likely to be at least a hundred thousand names, even if that operation has been running a fire sale to pump their numbers short term and survive the management axe.

Likewise, Network Solutions ran its own racket around New Venture Services Corp., and for all I know they still do...

https://www.namepros.com/threads/ne...ntures-services-corp-stole-my-domain.1055044/

Then there was Epik's "your domains are our domains" approach to the business. They're straight-up crooks and never caught any flak from ICANN.

The fact that registrars generally refrain from such systematic exploitation of their data access

I'm not as sure that's a fact. There is a very narrow prohibition on front-running, but, particularly at the registry level, for most large operations it is simpler to make a couple of bucks from a few thousand names than to play some complicated game to maybe make a thousand bucks off of one name. They all, however, participate in the secondary market in various ways, or engage in some kind of premium pricing arrangements for particular names.

You don't see the casino management playing at the tables either. By and large, most players are losers. The house is happy with a 5% take on the roulette wheel, even if they can't get 36 to 1 on a spin.

 

[DomainBanana]

I'm not sure why you believe they haven't.

You're right that registrars have acquired and managed large domain portfolios. However, there's a key distinction:

The examples you've provided (Frank Schilling, GoDaddy/Namefind, etc.) generally involve registrars acquiring existing portfolios or building them through regular market participation. That's different from systematically using non-public registration/search data to make acquisition decisions.

Your casino analogy is interesting, but I'd argue it points to why registry participation in the secondary market is problematic. Casino management doesn't play at the tables precisely because they have inside information about odds and patterns that regular players don't have. Similarly, a registry has access to market-wide data that other participants don't have - and unlike a casino, they're supposed to be a neutral infrastructure operator, not a house taking a percentage.

And to extend your casino analogy further - there are actually strict gaming regulations that specifically prohibit casinos from participating in their own games, precisely because their privileged position and access to information would create an unfair advantage. This regulatory framework recognizes that entities running gaming infrastructure shouldn't also be players.

Similarly, when a registry uses their privileged access to market-wide data to compete in the secondary market, they're effectively playing their own game with an information advantage that other participants can't match. That's why their role as neutral infrastructure operators should be kept separate from market participation.

 

[jberryhill]

To clarify: This isn't just about what we think 'should' happen - registry operators do have contractual obligations with ICANN regarding how they can use their position and access to data.

Again, it helps to be specific.

Specification 9 of the base registry agreement is the "Registry Operator Code of Conduct", and it says that the registry shall not:

"...register names in the TLD or sub-domains of the TLD based upon proprietary access to information about searches or resolution requests by consumers for domain names not yet registered (commonly known as, “front-running”)"

So, that doesn't apply to buying names that are already registered (whether expired or not).

I agree the "general principle" is there, but it doesn't apply to registered names as written. One could quibble over whether the "or" was intended to set the entire remaining phrase apart, but I'm not going deep into contract interpretation today, because...

The next question to ask when you find an arguably-violated contract provision is, "So what?" What, specifically, does the contract say will happen if the registry violates that section?

And, unfortunately, a lot of contracts are written that way. There's some value in having what lawyers call "precatory" clauses in contracts. These are clauses that say "you will not do X" but don't really have any particular consequences assigned to them. Because of the formality and ceremony around writing up a contract and having people sign it, these kinds of thing work like religious rituals, and people can believe that some precatory clause in a contract means something, but at the end of the day there are no real teeth to it.

Plus, there is always the magic of business entity formation and having variously-related business entities do things with an unclear connection to the principal entity - i.e. New Venture Services Corp.. Or, for example, run through the docket in the GoDaddy auction clawback case that was recently dismissed (and re-filed) and you'll notice how hard it is to nail down an entity that turns out to be three kids in a big coat all pointing fingers at each other.

 

[DomainBanana]

So, that doesn't apply to buying names that are already registered (whether expired or not).

To clarify: this involves a registry targeting both expired domains in auctions and dropped domains. While your point about Specification 9's application to registered vs. unregistered domains raises interesting questions for expired domains in auction, the dropped domain acquisitions would fall directly within its scope regarding 'domain names not yet registered.'

In either case - whether competing for expired domains in auctions or acquiring dropped names - the fundamental issue remains: A registry operator is using their privileged access to market-wide data to compete in ways that other market participants cannot match.

 

[jberryhill]

They don’t have to compete for actually dropped names.

If they want, they can reclassify any unregistered name as a premium or registry-reserved name.

If they are bidding in drop auctions for their own tld names, that strikes me as pretty silly.

What’s great about designating dropped names as premiums is that they get around the first word in the quoted clause, since they don’t have to register the name to put a premium price on it.

 

[DomainBanana]

They don’t have to compete for actually dropped names.

If they want, they can reclassify any unregistered name as a premium or registry-reserved name.

It's interesting that you're continuing to raise potential technical loopholes rather than addressing the fundamental issue:

Should registry operators be allowed to use their privileged position and access to non-public data to compete against regular market participants?

The fact that we're debating potential ways to circumvent rules, rather than whether this behavior upholds the principles of fair competition and registry neutrality, is itself concerning.

 

[Patryx]

It's interesting that you're continuing to raise potential technical loopholes rather than addressing the fundamental issue:

Should registry operators be allowed to use their privileged position and access to non-public data to compete against regular market participants?

The fact that we're debating potential ways to circumvent rules, rather than whether this behavior upholds the principles of fair competition and registry neutrality, is itself concerning.

DomainBanana,
I think all the readers of this thread understand your question, and I also think everyone would answer "not, they shouldn't".

But, said that... what doing?

You wrote: "The reason I've raised this publicly, even with some details withheld, is that the domain community should be aware this is happening. "

I think we are enough aware.

 

[jberryhill]

It's interesting that you're continuing to raise potential technical loopholes rather than addressing the fundamental issue:

Should registry operators be allowed to use their privileged position and access to non-public data to compete against regular market participants?

...because, as a practical matter, I don't advise people on what the world "should" be like. I first got involved in domain name policy back in the late 1990's when I was counsel to one of the entities that responded to the DoC call for proposals on entities to manage the domain name system, and from which ICANN emerged as the winning bid. Since that time, I spent a lot of time and energy on how things "should" be. Sometimes with marginal effect on how things turned out, and sometimes with no effect at all. Working on how things "should" be took a lot of my life I'll never get back.

So, sure, I agree. They shouldn't be allowed to do that. But, absent something that says "they can't do that", then they certainly are allowed to do it.

Pointing to a contract clause that does not apply, and claiming that it should forbid something it doesn't, because of some general motivating principle, does not work.

Another sad fact of life is that I get a lot of prospective clients who are upset by something someone did, and they want to sue over it. Translating "I am upset by something someone did" into "I have a worthwhile legal cause of action against someone" doesn't always work. Sometimes, they go find another lawyer and pay that lawyer to find out it doesn't work.

That's one of the reasons why, if you want to screw people over, then figure out a way to do it to a large number of people for a small amount. If you rip off someone for ten dollars, nothing is going to happen to you. Nobody is going to sue you for ten dollars and no law enforcement is going to care.

What you do, is you learn to scale that ten dollar rip off, so that you can rip off a million people for ten dollars a piece. Now, sure, at that scale, some enterprising law firm might get an idea that a class action could be possible, but even if that happens, its not as if any of those people are ever going to see their ten dollars back. Meanwhile, you've got ten million dollars to play with. Enjoy it. Life is short. You'll have a lot of fun before any consequences catch up with you, if ever. Keep some to split with the class action lawyer, and agree to give everyone a coupon for your next ripoff scheme. Done.

So, absolutely, I agree with you. They shouldn't be allowed to do that.

But: (a) I don't see anything that stops them from doing it, and you haven't pointed to anything either, and (b) on the big list of "What John Berryhill thinks about how things 'should' be" I'd have to put this pretty low on the list, somewhere way below "children shouldn't starve to death" and "children shouldn't die from treatable illness", and somewhere above "hot dog rolls should be sold in the same number as hot dogs in a package".

So, I hope I've made it clear that I agree with you that they shouldn't be allowed to do it. You have earned the coveted "John Berryhill agrees with me about something" certificate:

That, and four dollars, will get you a coffee at Starbucks. Hang it on the wall and impress your friends.

But that still doesn't prevent them from doing it. And, like I said above, a good chunk of the ICANN policy making community would just as soon decide to have a rule that NOBODY could hold an auction for a domain name. As an organization, ICANN wants nothing to do with the domain name aftermarket or regulating it. The only reason that the clause above made it into Spec. 9 was a widespread and largely mistaken belief that registries and registrars were engaging in front-running registrations of domain names sought by retail end-user customers. That's why the rule is written the way it is.

If you want to head off to ICANN and make it a rule, you have my complete agreement. But I promise you, if you think I don't sound sympathetic, you are going to love the response at ICANN to "there's a bad thing happening in the secondary market" which, again, most of them think is already a bad thing in its entirety.

 

[DomainBanana]

...because, as a practical matter, I don't advise people on what the world "should" be like.

Your cynicism about effecting change is clear, and perhaps well-earned from your years of experience. But suggesting that unethical behavior is fine as long as you can find technical loopholes or lack of enforcement is exactly the kind of thinking that enables market abuse.

When registry operators use their privileged position to compete unfairly in the market, it's not a $10 ripoff - it's a systematic abuse of infrastructure access that undermines market integrity. The fact that enforcement might be difficult or that ICANN might be reluctant to act doesn't make the behavior any less problematic.

I appreciate your candor about agreeing this shouldn't be allowed. But rather than explaining all the ways they might get away with it, perhaps your expertise would be better spent helping ensure they don't.

 

[jberryhill]

But rather than explaining all the ways they might get away with it, perhaps your expertise would be better spent helping ensure they don't.

And quit posting on Namepros?

Nothing I post here is going to have much impact on anything. So, as far as posting on Namepros is concerned, I am more often offering my take on the way things are as a somewhat recreational pursuit, than opining on the way one might wish them to be.

To the extent that I participate in policy discussions anymore, my focus is on a couple of UDRP issues, and not registry business practice regulation.

I am, of course, always open to suggestions.

 

[kor]

But rather than explaining all the ways they might get away with it, perhaps your expertise would be better spent helping ensure they don't.

I couldn't follow how the focus suddenly shifted from secret registry tricks to dragging a forum user into the position of Don Quixote...

 

[jberryhill]

how the focus suddenly shifted

It's frustrating to discover something one believes to be unfair with little ability to right the perceived wrong, and shooting the messenger is a pretty common thing too.

ICANN is not my circus, not my monkeys.

 

[DomainBanana]

It's frustrating to discover something one believes to be unfair with little ability to right the perceived wrong, and shooting the messenger is a pretty common thing too.

Speaking of shooting the messenger - this entire thread has focused more on criticizing me for raising these concerns (or suggesting ways to justify the behavior) rather than addressing the serious issue of a registry exploiting their privileged position to compete unfairly in the market.


I'm the one delivering an uncomfortable message about market abuse, and most responses have attacked the messenger rather than engaging with the substance of the problem.

 

[jberryhill]

Yeah. It's a tough crowd. I get your point. I don't hand out those certificates to just anyone.

 

[AEProgram]

Speaking of shooting the messenger - this entire thread has focused more on criticizing me for raising these concerns (or suggesting ways to justify the behavior) rather than addressing the serious issue of a registry exploiting their privileged position to compete unfairly in the market.


I'm the one delivering an uncomfortable message about market abuse, and most responses have attacked the messenger rather than engaging with the substance of the problem.

The first part of your post was very alarming because of what happened years ago with shill bidding at snap names.

You were asked for proof, you declined to give any so to me your post seems to be a angry response after you didn't get a domain you wanted. I put it in the category of people that accuse huge domains of hacking their domain when they realize they didn't renew their name and huge domains legally got it and is selling it.

Obviously if you have proof for the shill bidding claim, please post it.

By the way these posts happen outside of domaining too. When people lose at poker, they claim the poker site is rigged, they lose in stocks, the stock app they use is rigged, they lose money advertising on google, the ppc system is rigged, someone wins an election they don't like, election is rigged. All these claims are alarming because there have been confirmed cases in all of illegal activity but that doesn't mean that all claims people make are valid. Evidence is all we can ask for when someone makes a claim.

 

[DomainBanana]

When people lose at poker, they claim the poker site is rigged, they lose in stocks, the stock app they use is rigged, they lose money advertising on google, the ppc system is rigged, someone wins an election they don't like, election is rigged. All these claims are alarming because there have been confirmed cases in all of illegal activity but that doesn't mean that all claims people make are valid. Evidence is all we can ask for when someone makes a claim.

You're making quite a leap from 'someone raises concerns about registry behavior' to 'someone must be bitter about losing domains.'

I'm raising specific concerns about a registry using privileged access to non-public data to compete in the market. This isn't about any single domain or auction - it's about systematic behavior that affects market fairness.

The comparison to conspiracy theories about rigged elections or poker sites is completely off base. This is about specific market behavior by entities with privileged information access, not general complaints about losing.

While I understand the desire to put all my cards on the table, there are legitimate reasons why those raising concerns about registry behavior might need to maintain some anonymity. The risk of retaliation when challenging powerful market participants is real.