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

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DomainBanana

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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?
 
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The views expressed on this page by users and staff are their own, not those of NamePros.
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.
 
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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:

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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.
 
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...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.
 
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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?

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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.
 
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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...
 
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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.
 
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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.
 
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Yeah. It's a tough crowd. I get your point. I don't hand out those certificates to just anyone.
 
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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.
 
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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.
 
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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.
The above is my only focus. I addressed this in my comments earlier in this thread.
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.
Extraordinary claims require extraordinary evidence. Carl Sagan
 
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The above is my only focus. I addressed this in my comments earlier in this thread.

Extraordinary claims require extraordinary evidence. Carl Sagan

To be clear: this is about a registry operator actively acquiring domains using privileged access to non-public data - creating an unfair advantage that other market participants can't match. This isn't about shill bidding.

There's nothing extraordinary about suggesting that entities with privileged access to market data might use that advantage to compete unfairly. That's why we have regulations against information asymmetry in many markets:
  • Securities markets prohibit insider trading because access to non-public information creates unfair advantages
  • Commodities markets have rules against trading on privileged information about supply and demand
  • Stock exchanges themselves are restricted from using their privileged market data to compete against their members
  • Banks face restrictions on using customer transaction data for their own trading
The domain market shouldn't be different. A registry using privileged access to market-wide data to compete against regular market participants raises the same fundamental concerns about market fairness and integrity.
 
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To be clear: this is about a registry operator actively acquiring domains using privileged access to non-public data - creating an unfair advantage that other market participants can't match. This isn't about shill bidding.

There's nothing extraordinary about suggesting that entities with privileged access to market data might use that advantage to compete unfairly. That's why we have regulations against information asymmetry in many markets:
  • Securities markets prohibit insider trading because access to non-public information creates unfair advantages
  • Commodities markets have rules against trading on privileged information about supply and demand
  • Stock exchanges themselves are restricted from using their privileged market data to compete against their members
  • Banks face restrictions on using customer transaction data for their own trading
The domain market shouldn't be different. A registry using privileged access to market-wide data to compete against regular market participants raises the same fundamental concerns about market fairness and integrity.
Proof? Example?
 
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