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New gTLD Auctions: On Track for the First Auction on 4 June 2014

3 June 2014
By Christine Willett


As applicants work to secure rights to the 1,300+ top level domains (TLDs) that are expected to go live as part of the New gTLD Program, there are cases where more than one applicant applied for the same or confusingly similar strings. The Applicant Guidebook foresaw this scenario and prescribed Auctions as the method of last resort to resolve these contention sets in a clear and objective way.

Why Auctions

ICANN worked closely with its multi-stakeholder community to ensure different options were considered to resolve string contention when designing the AGB. After weighing the possibilities, and based on input from the ICANN community, auctions were determined to be the best option to objectively and efficiently resolve contention sets.

The Applicant Guidebook (AGB) also includes alternative method for string contention resolution available to some contention sets called "community priority evaluation" (CPE). CPE is available to any community-based applicant in a contention set. This is an evaluation to assess if a community-based application earns priority by achieving at least the minimum required score. The evaluation is based on a set of criteria outlined in section 4.2.3 of the AGB. If the application passes CPE, it can resolve the contention set, preventing the need for an auction for that set.

Additionally, ICANN encourages applicants in each contention set to resolve contention amongst themselves. We consider auctions to be a "mechanism of last resort," only to be used in cases where resolution cannot be reached by any other means. The Auction Rules and process were designed with this in mind, allowing applicants to resolve their contention set until one week before the auction.

Auction's Background

In early 2008, ICANN began a multi-step selection process to retain an auction design consultant. After a comprehensive evaluation, ICANN selected Power Auctions LLC, a vendor with extensive knowledge of auction design and implementation, and relevant experience in international high-stakes auctions for public goods. In mid-2013, the detailed auction process development for New gTLD Auctions began. A series of draft Auction Rules were published for community input, including a version published in December, which was submitted for formal public comment. The public comment period was utilized for the Auction Rules to make sure all perspectives were taken into consideration. Results from this comment period [PDF, 309 KB] were posted on 5 March 2014, including an operational set of the Auction Rules. We have made a few more changes since then, and the current version of the Auction Rules can be found in the resources section of the Auctions landing page on the New gTLD Microsite.

How It Works

As mentioned, the New gTLD auctions will utilize an ascending-clock method, which provides contending applicants with real-time market feedback to help them make valuation decisions. The second price Ascending Clock Auction method is known for getting closest to true market value of the good being auctioned, because the winning price is that of what a competitor stated as their maximum willingness to pay. In the method, the auctioneer successively increases the start-of-round and end-of-round range of prices, on a per round basis. Applicants within that auction submit bids within the defined price range in the auction round. As the price ranges of the auction rounds increase, applicants may choose to exit the auction. When no direct contention remains, the auction is concluded and the prevailing applicant(s), after paying the winning price, can proceed toward contracting then delegation.

Latest Auctions News

Currently (as of 30 May 2014), there are 164 unresolved contention sets, which could potentially require an Auction to resolve the contention. Starting on 4 June 2014 we will hold the first Auction to resolve the contention set for 信息, (xn--vuq861b), which is a Chinese Internationalized Domain Name (IDN) for "information" or "info." The remaining contention sets are scheduled for one of the subsequent Auctions, which are slated to occur on a monthly basis throughout 2014 and into early 2015. The current Auctions Schedule [PDF, 307 KB] can be found in the resources section of the Auctions landing page on the new gTLD microsite. In the coming weeks the Auction Schedule and Results will also be viewable from the contention set status page.

To help applicants prepare for the Auctions, Power Auctions has prepared three training videos, which walk the bidders through account set up, auction mechanics, and the post auction activities. If you are an applicant in a contention set, I encourage you to watch these videos in advance of your Auction.

Please continue to check Auctions landing page on the New gTLD Microsite for the latest Auction news and updates: http://newgtlds.icann.org/en/applicants/auctions.


Christine Willett