Competition and New gTLDs: More than Meets the .EYE

FairWinds Partners —  June 21, 2012

One week after ICANN revealed 1,930 applications for new gTLDs, the Internet community continues to debate the validity of many parts of the application process. In particular, a great deal of chatter kicked up over the weekend about whether or not a brand’s ownership of a generic-term gTLD is anti-competitive. This debate has been fueled largely by corporate applications for generic words as gTLDs, like Amazon’s application for .MOVIE (in fact, Google and Amazon have been taking most of the flak, given their large volume of applications).

The discussion has gotten heated at times, but the fact is, it’s too soon to make serious predictions about how competition issues in new gTLDs will unfold. Keeping that in mind, there are a handful of other issues to consider before establishing an opinion on whether or not you think brand-owned generic-term gTLDs will be inherently anticompetitive.

First, if we take a step back and examine the concerns people have voiced about anti-competition with a little added objectivity (and an eye toward the more distant future), it becomes clear that many anti-competitive accusations against gTLDs are based on the assumption that all generic-term strings will be closed to third-party registrations. But in reality, this varies from case to case; many generic-term gTLDs are designed to eventually open up to a wider group of registrants. That would mean that many more businesses, individuals and organizations could purchase a domain in these spaces. If this holds true – and we’re quite confident it will – questions of anti-competition become much less urgent.

Another fact to consider is that everyone had the same opportunity to apply for generic-term gTLDs – and there are a fair number of instances where these generic-term gTLDs might end up in contention sets because so many did apply. That in and of itself demonstrates the presence of competition throughout the gTLD process. It is also worth mentioning that brands have owned generic-term .COM domain names for decades now and attracted far less controversy. For example, Barnes & Noble currently owns the domain Books.com, and that’s hardly considered monopolistic. Strategic companies like B&N have been able to successfully own and use these generic-term domain names without facing any significant problems.

When we think about all the possibilities that come with generic strings, its difficult to label gTLDs as anti-competitive based on reasoning like, “There’s only one .MUSIC, so it’s unfair to close it off from registration” Until now, there has been only one Music.com, only one Music.net, and Internet users have managed to cope just fine. To put this idea in more practical terms, imagine the following hypothetical scenario:

Donald is the owner of a music store in Sydney that specializes in guitar sales and repairs. Previously, Donald owned the domain name DonaldsGuitarsAndMusicInSydney.com.au. For obvious reasons, his customers found this name cumbersome and difficult to remember. As a result, his domain fell short of his hopes to drive in new business. Donald may be frustrated if Amazon ends up operating .MUSIC as a closed registry and as a result, he cannot register DonaldsGuitars.music. But even if .MUSIC were totally open, there is still a chance that another Donald could beat him to DonaldsGuitars.music, in the same way that the other Donald may have beaten him to DonaldsGuitars.com.

The difference now is that instead of having to lengthen his domain or move to a less popular extension like .NET, Donald has the option of registering a domain like DonaldsGuitars.Sydney. Under this new domain, Donald may actually see his business flourish and his online presence increase, because with a .SYDNEY domain, he can convey that he is a Sydney-based business and connect with local customers – the ones that are much more likely to patronize his shop.

Donald’s story is a fictional, over-simplified example of how domain strategy may evolve in the new gTLD era, but it serves to underscore a critical idea: new gTLDs are intended to expand the domain name space, and before we can accurately assess the effect that they will have on competition we need to gain the perspective that will only come with time. Right now, we can’t know exactly what path the Internet will take, but hopefully for all users, from the Donalds of the world to the McDonald’s – and everyone in between – new generic-term gTLDs will open up a huge array of domain name opportunities.