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  • Sep 26, 2016 @ 02:11pm

    Outstanding legal concerns on Internet transition including antitrust warrant delay by Congress at a minimum.

    This week the Senate will vote on a continuing resolution that does nothing to stop the transition of U.S. oversight of Internet’s domain name system by the National Telecommunications and Information Administration (NTIA) to the international community. However, there appear to be several key oversight considerations and spot checks that simply have not been performed by Congress yet, all seeming to advise strongly in favor of postponing the transition.

    Particularly, a Sept. 21 letter by House and Senate Judiciary Committee Chairmen Bob Goodlatte and Chuck Grassley to the Department of Justice note outstanding legal concerns including the lack of adequate antitrust analysis being performed by the government’s top lawyers in the creation of a global Internet monopoly in the Internet Corporation for Assigned Names and Numbers (ICANN). This was a follow-up to their Sept. 8 joint letter with House and Senate Commerce Committee Chairmen Fred Upton and John Thune to both the Commerce and Justice Departments raising similar concerns.

    The fact that there has been no reply yet to either letter particularly from the Attorney General’s Office or the Antitrust Division is unbelievable. But the fact that this has not caused House and Senate leaders—particularly House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell — to stand up publicly for their committee chairmen on a key oversight question, or to use the continuing resolution as a vehicle to delay the Internet transition, is simply inexcusable. There is too much at stake here.

    The failure of Ryan and McConnell to stand up publicly on this issue represents no less than an abdication of their Article One power of the purse and oversight responsibilities. How can they ignore such high-level concerns?

    These questions require the senior level attention that only Ryan and McConnell can provide, and the use of leverage that only the continuing can achieve to postpone the transition in the least so more oversight can be performed. Here is a rundown of several unanswered concerns compiled by Americans for Limited Government, particularly on outstanding antitrust questions, that in the least warrant a delay of the transition and at most advise against ever completing it.

    ICANN claimed it is immune from antitrust in 2012

    We noted with great interest ICANN’s response to L. Gordon Crovitz’s recent piece in the Wall Street Journal on the potential antitrust liabilities awaiting ICANN once its contract with NTIA expires at the end of the month. In its response to Crovitz, ICANN claims that “ICANN isn’t and never has been exempted from antitrust laws… No ruling in ICANN’s favor has ever cited an antitrust exemption as the rationale.”

    But that could be a false comfort. In 2012, when sued ICANN on antitrust grounds, ICANN argued that being a government vendor under contract, the Internet monopoly if it existed was “thrust upon” it. Therefore, antitrust did not apply.

    ICANN explicitly argued that it “obtained the sole authority to delegate TLDs and select registries through ‘its agreements with the U.S. government.’ … Put simply, ICANN did not conduct its operations to unlawfully acquire the authority to designate TLDs and select registries; thus, this authority does not support’s monopoly claim because the Sherman Act does not punish firms whose monopoly position has been ‘thrust upon’ them.”

    The federal district court agreed that “ICANN’s power to control which TLDs will be accepted into the DNS and the entities that will act as registries for those TLDs was delegated to it by the United States Department of Commerce. As a result, whatever monopoly power ICANN may possess was ‘thrust upon’ it as the result of ‘historic accident’ rather than the result of ‘willful acquisition.’”

    Now, even if that doesn’t fully constitute an “antitrust exemption” being granted by the court, ICANN is clearly misleading Wall Street Journal readers. When it came down to it, ICANN argued for the antitrust exemption. And after the transition, when the inevitable lawsuit comes, it will surely argue again for it.

    The question we have raised, and so has Crovitz, is what happens after ICANN is let loose from the government contract? Do they get to keep their antitrust exemption? Do they wind up under the United Nations to maintain it? All we’re getting from ICANN and NTIA right now on this issue is obfuscation, but the evidence suggest a few potential outcomes here, none of them good.

    If ICANN wins antitrust case in federal court, DNS will be an unaccountable monopoly, if it loses, DNS could become fractured

    After the contract expires, it appears likely ICANN will simply argue again in court that because the IANA functions were “thrust upon” it by the government contract, and that it still qualifies for the antitrust exemption.

    Federal courts may ultimately agree, and as a result, the global Internet monopoly will continue unabated, and no longer be subject to U.S. oversight or any U.S. constitutional protections that exist in the exercise of a government contract, unaccountable. Which may be the most dangerous outcome of all — an unregulated Internet monopoly exempt from antitrust and the Constitution’s First Amendment.

    When the case comes up, and should ICANN win there may not be a way to even proceed to the merits of an antitrust case.

    Or alternately, at the other end of the spectrum, say ICANN is sued and actually antitrust tears ICANN into pieces. That would mean then the transition proposal to a single entity — ICANN — planned by the multistakeholders and NTIA is very much the wrong model.

    In this case, then, the future of Internet governance might not be determined by ICANN, NTIA, the multisakeholders or even Congress, but rather federal courts, hardly a desirable outcome, and not one the transition proposal has anticipated.

    Either way, neither an unaccountable monopoly nor a fractured DNS would be a good outcome when everything works fine now.

    Commerce, DOJ have not adequately considered antitrust implications of transfer

    Adding uncertainty to the mix, it would appear neither NTIA nor the Justice Department has adequately considered any of these potential problems for the past two and a half years.
    An Americans for Limited Government in a Freedom of Information Act (FOIA) request asked the NTIA for “[a]ll records relating to legal and policy analysis developed by or provided to NTIA concerning antitrust issues for the Internet Corporation for Assigned Names (ICANN) if NTIA relinquishes its responsibilities” over the domain name system.

    The agency contacted us and we clarified and limited what we were looking for to simply between Jan. 1, 2014 through June 14 of this year. That covered the entire period of the transition, which was proposed publicly March 14, 2014, and the framework put forth by ICANN was approved by NTIA on June 9.

    On Aug. 16 the agency responded to our FOIA request that “NTIA has conducted a thorough search for responsive records within its possession and control and found no records responsive to your request.” Nor did the agency claim any privileged exemptions under FOIA, which might have prevented such an analysis from being disclosed. Therefore, such an analysis did not exist.

    Or so we thought. On Sept. 14, in a Senate Subcommittee on Oversight, Agency Action, Federal Rights and Federal Courts hearing, suddenly NTIA administrator Lawrence Strickling in his opening statement said, “Upon the community’s completion of the plan [in March] NTIA led an intensive interagency review to ensure it met these criteria. During this review, the Department of Justice assessed whether the transition presented any competition issues and at the end, on June the 9th, we found the plan satisfied each and every one of our criteria.”

    Similarly, in a question from Senator Mike Lee (R-Utah) specifically on antitrust at the hearing, who asked if the Department of Justice had been consulted on the antitrust question, Strickling replied, “During the evaluation of the transition plan, there was an interagency committee of federal agencies including the Department of Justice. As part of that process the Department of Justice looked at whether there were any competition concerns that might result from this transition and they concluded that there were none.”

    NTIA needs to get its stories straight. The Wall Street Journal’s L. Gordon Crovitz did a full report on our FOIA and the lack of antitrust analysis. Why hasn’t NTIA given the Department of Justice analysis to the Journal to refute the story? And why did we only hear about this 16 days before the transition was to be complete? Why not simply post the Department of Justice analysis on the NTIA website for the world to see?

    If the agency did actually perform an antitrust analysis prior to June 9, it most certainly should have been netted by our FOIA request, so why hasn’t NTIA produced it? Why did the agency say there were no responsive documents?
    An obvious reason might be because the FOIA officer at NTIA simply did not find the analysis in its initial response to Americans for Limited Government. To be certain, Americans for Limited Government Foundation President Nathan Mehrens has filed another FOIA request, this time explicitly asking for the Department of Justice assessment on “competition issues” referenced in Strickling’s testimony that supposedly took place prior to June 9.

    But an equally plausible reason no antitrust analysis has turned up is because no such analysis was performed. It is not lost on us how Strickling never actually said the word “antitrust” when he referred to the interagency review. There are many issues to do with competition in the domain name system market that do not necessarily invoke antitrust.

    For example, if you read the actual interagency review Strickling talks about and what was specifically looked at by NTIA and the taskforce, there was no section on antitrust at all, not even a passing reference. You cannot find the word “antitrust” in the document. It is what prompted Americans for Limited Government to do the FOIA request in the first place. You can however find references to “promoting competition, consumer trust, and consumer choice in connection with any implementation of generic top-level domains (gTLDs),” for example.

    But promoting competition in the implementation of new top-level domain names is not the same as performing an antitrust analysis on the potential monopoly powers ICANN will wield post-transition as the only entity in the world that bids out those domain names and collects hundreds of millions of dollars of exclusive feeds for every domain name sold in the world.

    This is not the first time in this process NTIA has failed to turn over legal analysis justifying its position on the transition. The first round of FOIA requests by Americans for Limited Government for legal and policy analysis providing authority to perform the transition revealed that NTIA did not address key constitutional and legal questions prior to announcing the transition in March 2014 either.

    It wasn’t until after Congress started asking questions about it that the agency began producing legal justifications for the transition. But nothing from prior to the transition’s announcement. No privileged exemptions under FOIA. The agency didn’t wonder about whether it had the authority to perform the transfer before deciding that it was going to do so.

    The same thing appears to have happened here with the antitrust question. It wasn’t until Americans for Limited Government filed its FOIA request for the antitrust analysis that we heard a single peep out of NTIA to do with antitrust.

    To be certain, the first document publicly available document on antitrust we’re aware of from NTIA was not posted until Aug. 16, in a Q&A purporting to answer a question about antitrust analysis, curiously the same exact day the agency responded to our FOIA. Again, in this Q&A NTIA used the same exact, carefully worded phrasing Strickling used in his testimony: “In its decision to move forward with the transition at this time, the U.S. Government did not identify any significant competitive issues relating to the proposed transition.”

    But maybe the reason the agency and the Department of Justice did not identify any significant antitrust issues is because it did not look. Surely it should have. Just consider the June 1998 Clinton White Paper, which soon created the basis for ICANN’s contract with the government, explicitly considered the antitrust issue at the outset of the Internet’s birth: “Several commenters suggested that the U.S. Government should provide full antitrust immunity or indemnification for the new corporation. Others noted that potential antitrust liability would provide an important safeguard against institutional inflexibility and abuses of power.”

    To which, NTIA replied, “Applicable antitrust law will provide accountability to and protection for the international Internet community. Legal challenges and lawsuits can be expected within the normal course of business for any enterprise and the new corporation should anticipate this reality.”

    That is, NTIA was saying that it would not provide antitrust immunity to ICANN when the time ever came it was no longer under a government contract, and that it would have to fully comply with antitrust law. Isn’t that a significant antitrust issue? And shouldn’t have ICANN’s arguments to the contrary in 2012 come to the fore in that analysis?

    Surely too the agency ought to have considered the Cross Community Working Group (CCWG) on Enhancing ICANN Accountability’s March 10 document, which was addressed directly to NTIA administrator Lawrence Strickling, “IANA Stewardship Transition Proposal and Enhancing ICANN Accountability Recommendations.” In Annex 15 on stress tests, on page 470, it highlights antitrust as a potential problem, daresay, a significant competitive issue: “Stress Test #3: Litigation arising from existing public policy, e.g., antitrust suit. In response, ICANN Board would decide whether to litigate, concede, settle, etc.”

    The CCWG noted the consequences of an antitrust suit could include “Significant interference with existing policies and/or policy development relating to relevant activities,” and concluded that “Existing measures are inadequate.” Yet, nothing in the NTIA approval of the transition proposal even addressed these risks.

    Or perhaps NTIA might have considered the works of A. Michael Froomkin and Mark A. Lemley in 2003, “ICANN and Antitrust,” which lays out the significant antitrust issues facing ICANN. Or maybe “ICANN’s Escape from Antitrust Liability,” a 2012 article by Justin T. Lepp in the Washington Law Review. Or even Milton Mueller’s response to Americans for Limited Government President Rick Manning’s Senate testimony on May 25 where he wrote, strikingly, that “The U.S. asserted the power to control changes in the root zone to protect Network Solutions (now Verisign) from antitrust liability, not to protect ICANN from foreign governments or to protect the open Internet.”

    Even the Government Accountability Office (GAO) was able to find something on antitrust in its legal review of NTIA’s authority to perform the transfer, noting that a motivation for requiring NTIA to approve changes to the domain name system’s root zone file was to avert antitrust: “Another motivation, according to the former NTIA official, was to provide Network Solutions with a defense against allegations of antitrust violations.”

    Not even Thune, Grassley, Goodlatte and Upton can get an answer to these questions

    All we get from NTIA now on antitrust is see no evil, hear no evil, speak no evil. They either haven’t performed the analysis or have shielded it from public disclosure. On Sept. 8, Committee Chairmen John Thune, Chuck Grassley, Bob Goodlatte and Fred Upton wrote a letter to DOJ and Commerce that noted the lack of antitrust analysis, and here we are, days before Congress will approve the transition (by not defunding it) and DOJ and Commerce have still failed to adequately respond to perhaps the most important questions facing ICANN after it is let loose. They certainly haven’t responded to that letter.

    DOJ has offered to brief a Senate committee informally, but not even that has happened yet. We’re down to the wire and Congress is about to vote, but nobody knows the answers to these questions.

    Until these questions are thoroughly examined, as they should have been the past two and half years, the transition must be postponed. There are simply too many pitfalls to vesting the Internet Assigned Numbers Authority (IANA) functions into a single entity wielding monopoly powers.

    Lack of recourse once transition occurs, and oh, what’s the back-up plan?

    The most troubling concern is the lack of remedy for the U.S. once the transition is complete on Oct. 1.
    Right now, if NTIA approves changes to the root zone that result in censorship, somebody could conceivably take NTIA to federal court for a facial violation of the First Amendment. Post-transition, there will be no such remedy.
    These concerns have to be raised at the senior level. In the very least, Congress should delay until at least December so we can get our next FOIA responses, DOJ can perform its briefing and more hearings and analysis of these questions can occur. Given the likely outcomes of either an unaccountable monopoly or fractured DNS, the transition is a terrible idea.

    Currently, under U.S. government contract, ICANN administers the basic functionality of the domain name system, Internet protocol addresses, and the like. In March 2014, the Obama Administration announced its intent to fully relinquish those functions to ICANN, which would be the world’s only distributor of domain names.

    What if something went wrong after such a transition? What if the functions were used to engage in censorship or to otherwise harm U.S. interests? What could the government do then.

    That is why in the omnibus, Congress required NTIA to submit a report due January 30, 2015 “regarding any recourse that would be available to the United States if the decision is made to transition to a new contract and any subsequent decisions made following such transfer of Internet governance are deleterious to the United States.”
    The agency’s answer? Specifically, NTIA told Congress that “Our preliminary answer is that the criteria for the plan that NTIA established in its March 2014 announcement will ensure an outcome that is not ‘deleterious’ to the United States.”

    NTIA continued, “Nonetheless, NTIA understands the concerns of Congress in this regard and will regularly revisit this question during the planning process and when evaluating the ultimate ICANN-submitted proposal to ensure that the final plan is not deleterious to the interests of the United States and its Internet stakeholders.”

    So, NTIA’s contingency plan should anything go wrong with the Internet transition after it takes place is to assure Congress that nothing will go wrong. The transition will not be deleterious to U.S. interests, the agency decrees. Don’t worry about it.

    Consider that. The agency refused to submit the report it was supposed to because it disagreed with the premise of the question being asked. What if it results in global censorship? Or an Internet tax? Or worse.

    Especially for members who say they want to support the transition, these are the questions that need to be asked and answered — before it’s too late. For goodness’ sake, the Obama administration couldn’t even give Congress the back-up plan it asked for — almost 2 years ago!

    How can this be ready for primetime?

    Defunding the Internet giveaway is not a controversial rider. It is performing Congress’ due diligence and Article One prerogatives on a question of fundamental importance to the vital Internet freedoms of each and every American. No less than the fate of the free and open Internet is at stake. What’s the rush here?

    Robert Romano is the senior editor of Americans for Limited Government.

  • Mar 20, 2014 @ 12:26pm

    Re: Favorite thing about this story

    Here's why Americans for Limited Government opposes it: In short, right now, if there were any censorship by ICANN, a federal government contractor, there would be a recourse under the First Amendment and in federal court. In 1998, groups like the Electronic Frontier Foundation (EFF) criticized the transfer of DNS to a private foundation like ICANN. ?Internet administration has always guaranteed free speech and due process, since it has been done by U.S. Government contractors who are required to follow the U.S. Constitution. If the New IANA moves Internet administration out from under the U.S. Government, as there is general agreement to do, the public will lose these guarantees,? Shari Steele, Staff Counsel at EFF warned at the time.