ICANN is seeking community input on the detailed rules (i.e. methodology and processes) for Auctions involving Contention Sets containing Indirect Contention relationships.
Section I: Description and Explanation
The existing version of the Auction Rules for New gTLDs ("Rules for Direct Contention") does not contain provisions for indirect contention (see below for background and definitions), and ICANN has worked closely with its auction service provider, Power Auctions LLC ("Power Auctions"), to devise an appropriate methodology for executing auctions among contention sets that contain indirect contention relationships. This public comment period is thus being opened to gain community input on the appropriate rules (i.e. methodology and processes) for these auctions.
ICANN welcomes feedback on the following:
- Concept for Indirect Contention Auctions – "Indirect Contention" is defined in section 4.1.1 of the Applicant Guidebook as existing when "two strings are…both in direct contention with a third string, but not with one another" (e.g. Applicants A and C are in direct contention with Applicant B, but in indirect contention with each other, as diagramed in Figure 4-1 in section 4.1.1). The main difference between Direct and Indirect Contention Auctions exists with the concept of "Feasible Sets," where more than one application ("Feasible Sets") from a single contention set can be deemed winners. Groups of winning applications are possible because of indirect contention; indirect contention relationships mean that more than one string in a contention set may prevail and co-exist in the root zone. For example, in a contention set with A-B-C Applications, Application A and Application C are both in direct contention with Application B, but not in direct contention with one another. A and C are in indirect contention with one another and can co-exist in the root zone; the two together thus form a "Feasible Set". Application B is in direct contention with both Applications A and C and thus cannot co-exist with any other members of the contention set; B thus forms a "Feasible Set" by itself. In the course of the auction, the bids from each member of the feasible set are summed and compared to the sum of the bids from the other feasible sets. The feasible set (e.g., A+C or B) with the highest total bid is determined to be the winner.
- Auction Design for Indirect Contentions (Version 2014-11-10) ("the Auction Design Paper") – The Auction Design Paper explains the design considerations of an ascending-clock auction for indirect contention and was drafted by Power Auctions. The Auction Design Paper clarifies the concept described above with more detail and examples, and provides the rationale for why this methodology is appropriate for these rare indirect contention scenarios.
- Auction Rules for New gTLDs: Indirect Contentions Edition (Version 2014-11-10) ("Rules for Indirect Contention") – The Rules for Indirect Contention uses the same format and contains largely the same information as the Rules for Direct Contention. It details eligibility, scheduling, preparation procedures, deposits, bidding limits, and refunds, but deviates based on consideration of the recommendations provided in the Auction Design Paper. Many of the concepts mentioned in the Auction Design Paper are incorporated into the Rules for Indirect Contention, such as in the sections detailing the rules for "Bidding," "Validity of Bids," or "Processing of Bids after a Round." Community input on how concepts translate into execution of rules will be especially beneficial.
ICANN will take all feedback into account, but would like to emphasize that it is seeking input on the following topics:
- The conditions for determining winning applications and "Feasible Sets"
- Pricing / cost allocation for winning applications
Upon close of the public comment period, ICANN will publish a report summarizing and analyzing the comments, and update the Rules for Indirect Contention. ICANN will then move forward to scheduling and administering auctions for indirect contention sets.
Section II: Background
Section 4.3 of the Applicant Guidebook describes auctions as the method of last resort to resolve string contention sets. It also provides an overview of the ascending-clock auction process as well as simplified illustrations of the execution of a contention set auction. ICANN opened public comment in December 2013 on the Auction Rules for Direct Contention, and these rules were implemented in February 2014 after completion of the public comment period. To date, all 12 auctions scheduled by ICANN and the three facilitated to completion by Power Auctions have contained contention sets with only direct contention relationships.
There are four contention sets with indirect contention relationships and which are not yet scheduled for an auction. The Rules for Indirect Contention are required in order to allow facilitation of auctions for these four sets. The four sets that contain indirect contention relationships are: SPORT/SPORTS, SHOP/SHOPPING/通販 (xn--gk3at1e), GAME/GAMES, WEB/WEBS.
Section III: Relevant Resources
- Applicant Guide Book Section 4.3 [PDF, 428 KB]
- New gTLD Auction Rules v.2014.11.03 [PDF, 239 KB]
- Auction Schedule as of 13 November 2014 [PDF, 252 KB]
- Auction Rules for New gTLDs: Indirect Contentions Edition [PDF, 685 KB]
- Auction Design for Indirect Contentions [PDF, 225 KB]
- Introduction to Auctions for Indirect Contention - Presentation [PDF, 838 KB]
Section IV: Additional Information
A webinar regarding the Rules for Indirect Contention will be held on 3 December 2014. The webinar is intended to be an in-depth dialogue and will include an overview as well as discussion of key concepts, preliminary rules, and numerous detailed examples of potential indirect auction scenarios. A recorded version of the webinar along with presentation materials will also be made available on the Auctions microsite: http://newgtlds.icann.org/en/applicants/auctions.
Note: The recommended Rules for Indirect Contention contain changes to clause 68 (Anti-Collusion). The corresponding clause in the Bidder Agreement (2.6 Anti-Collusion Rules) will be updated with the same changes after the public comment period and upon finalization of the rules.