The new gTLD aftermarket has arrived

The Internet Corporation for Assigned Names and Numbers (ICANN) launched the application process for new generic top-level domains (gTLDs) in January 2012. The new gTLD programme will result in an unprecedented expansion of the Domain Name System from the existing 22 TLDs, such as ‘.com’ and ‘.org’, to over 1,400 TLDs.

While ICANN's new gTLD programme would appear to be a success, the volume of registrations across those gTLDs that are now operational has fallen below expectations. As a result of this, some new gTLD registry owners may be seeking to sell their gTLD registries. The preferred method for the sale and purchase of gTLD registries would appear to be via auctions, using the auction services provider Innovative Auctions. It is likely that those seeking to acquire new gTLD registries are entities which are already operating other gTLD registries, and thus this is the first step in a consolidation of ownership process in the new gTLD space. While it was anticipated that there would be some form of consolidation of gTLD registry ownership, it was projected to happen further in the future.

It now appears that the emerging new gTLD aftermarket has arrived, with reports of the first sales of operational gTLD registries being scheduled for October 2014.

At the time of writing, there was no information available regarding which new gTLD registries will be entered into auction. However, with the recent announcement by ICANN that the next round of new gTLD applications is not likely to commence until 2018, such auctions are likely to be the only opportunity for aspiring companies to acquire a new gTLD registry.

However, it is worth noting that any potential auction participant should be aware of the requirements that ICANN will expect them to meet as the parent company of a new gTLD registry operator. As any entity who applied for a new gTLD during the 2012 application round will be able to confirm, there are significant background checks conducted by ICANN on applicant entities, including criminal background checks, to ensure the operational stability of the registry and the protection of registrants’ interests.

David Taylor and Daniel Madden, Hogan Lovells LLP, Paris