November 15, 2010, 20:59 Business

“If we didn’t have an auction, it would be held by cybersquatters”

FAS will check the .рф domain

Igor Bakharev , Elizaveta Surnacheva A deputy request was sent to the FAS with a request to check the legality of registration of names in the .RF domain zone. Registrars are suspected of cybersquatting and violating antitrust laws. RU Center CEO Alexey Lesnikov, in an interview with Gazeta.Ru, refutes the accusations and calls domain auctions the best industry practice.

State Duma deputy Alexander Kogan sent a parliamentary request to the Federal Antimonopoly Service with a request to verify compliance with the law in the process of registering the Russian-language domain .РФ. In a request available to Gazeta.Ru, the deputy states that the actions of registrars can be qualified as cybersquatting (purchase of domain names for the purpose of subsequent resale).

On November 11, open registration of domain names in the .РФ domain began. During the first day of open registration in the .РФ domain, almost 250 thousand domain names were registered. 49.5% of these names were registered by the RU Center registrar. At least half of these names were registered under the name of the registrar company itself for the purpose of subsequent holding a closed auction. The list of names purchased by the registrar contains many “beautiful” domains, registered trademarks, names of organizations, brands and common words.

“The specified domain names are the most important for the formation of the structure of the .РФ domain. In fact, these domain names are key for Internet users when searching for information and for direct addressing,” says Alexander Kogan.
“I want to understand whether this company enjoyed a dominant position in the market and whether it was somehow affiliated with the management of the technical service of the domain name registration system (CJSC Internet Technical Center),” the deputy tells Gazeta.Ru. In his opinion, “the actions of RU Center violate the decisions of the highest governing body of the Coordinator and Administrator of the .RF domain, and this also contradicts the words of President Dmitry Medvedev , who stated that when registering new domains, a fair system of the first applicant should be in effect.”

General Director of RU Center and Chairman of the working group on introducing registration in the .RF domain Alexey Lesnikov answered questions from Gazeta.Ru.

— During the first day of open registration in the .РФ domain, almost 250 thousand domain names were registered. You turned out to be a leader among registrars. Based on the number of domains registered by you or for you, it turns out that with your participation transactions were concluded on 49.5% of all domain names in the zone. How did you do it?

- I think that this is not even enough. We assumed that there would be more, because RU Center is the largest registrar. As an example, we accepted applications for 80% of domains during the priority registration period (for government agencies, trademarks, trade names and media). This means that all “stable” organizations are registered through us. So there is nothing surprising about the 50% number. By the way, we managed to register only 79% of the domains from the total number of applications for which pre-orders were collected.

— Before the start of the open registration stage, the coordination center stated that all registrars would be placed on equal terms. How did you manage to process so many applications if everyone was on equal terms?

— Each registrar had the right to submit no more than 4,800 applications per hour to the Internet Technical Center. This rule was introduced by the center so that everyone would be in the same conditions. In fact, this put us at a disadvantage, since we had 105,000 preliminary applications - much more than other registrars (the closest competitor had 32,000 applications). We were engaged in registration, officially having two registrars: the RU Center brand unites ANO RSITs and CJSC RSITs. Therefore, we could register 9,600 domains per hour. And as of November 10, we had 105,000 paid preliminary applications. This means that we would have to work more than 10 hours without stopping to satisfy all the pre-orders. And during this time we could not serve new clients, and since some of our clients submitted applications to several organizations at once, we could lose them: someone else would simply have time to register their name. So we found ourselves in unequal conditions.

In order to have time to register all the names, we entered into partnership agreements with Relcom, Elvis Telecom, Demos and Domenus.

— Why then did you manage to get so many “beautiful” words that 17 of your competitors competed for? For example, “magazin.rf”, “table.rf”, “clinic.rf”, “toys.rf”, “telephone.rf”.

— We acted strictly according to the rules. And we clearly knew that we would not be able to register all the names at once. Therefore, we compiled lists and sent first those applications for which there were the most applications. Of course, all the “beautiful” names were included in them. We were able to register 79%, the rest went to competitors. For example, the domain “rabota.rf” was the second most popular (about three hundred applications), and we, of course, wanted to register it too, but we failed.

— Initially, auctions for “beautiful” names of the .RF zone were planned to be held in the coordination center itself. Then it was assumed that open registration of domains would begin according to the “Dutch system,” that is, with a lower price. This was to protect domain names from cybersquatters. However, later this idea was canceled at the CC; they decided that applications should be accepted on a first-come, first-served basis. Why did you decide to return to the idea of auctions?

— We decided to hold our auctions at the moment when it became clear that the coordination center itself would not conduct Dutch auctions. We believe that at the moment when the opportunity to get something opens up at hour X and there are many people willing to buy it, there is no fairer way to determine who is more worthy of buying than an auction. The standard approach that works in open domain zones is “first come first”. But this approach does not work when opening a registration in any new domain. Because there are actually no “slippers” yet, but there is already a demand. Imagine a crowd of 600 people waiting for, for example, the domain “auto.rf” to appear. And if we announced that “the first is so-and-so,” and the remaining 599 people are free, then they will all begin to accuse us of being deceived. And even showing our logs will not convince them: after all, this is our log, and it is impossible to convince anyone that it is correct. They most likely will not go to court, but there will be 599 dissatisfied people who consider themselves deceived. This is unacceptable for us.

—Have you encountered such cases before?

— The Russian domain business went through this with vacant domains before the advent of auctions, when they were bought up by “professionals” of the domain business. It was impossible to prove to people that they were doing this generally honestly, they just had 20 servers sending registration requests. Then we introduced an auction of released domains, and, in our experience, there were no complaints about the way we conduct such auctions. We have been conducting such auctions for 6 years. The average price for them is up to $100. And according to our past experience, when we carried out registration on the basis of “whoever applies first”, at the moment the name was released, we received a DDOS attack from a dozen servers so that not a single one wanted it. other than “professionals”, I couldn’t even apply. So there are two options: either professionals will buy everything and sell it at exorbitant prices, or there will be closed auctions organized by registrars according to open rules, among those who really need these domains. If we didn’t have an auction, then “gray” auctions would be carried out by cybersquatters themselves.

— The Federal Antimonopoly Service actively opposed the auctions. In this idea, the department found signs of a violation of antimonopoly legislation. Deputy Alexander Kogan sent a request to the FAS to check whether your company’s actions in opening the registration of the Russian-language domain .РФ constitute cybersquatting. As the department told Gazeta.Ru, they “became interested in this situation.” Aren't you afraid of questions?

- We're not afraid. We registered everything for clients, but only 170 applications for ourselves. Therefore, we do not think that we are wrong. The issue of holding auctions was considered by the CC council. And they decided that there would be no auctions at the level of the CC itself. Then the question arose whether or not to prohibit registrars from holding auctions on their sites. And during the discussion we realized that if everything is banned, then everything will be bought up by cybersquatters. I personally think that it was logical to hold auctions at the CC level so that the money would stay there and go to the development of the infrastructure of Russian national domains. Moreover, this must be done precisely with a gradual reduction in price.

— Auctions are sometimes accused of having a “buyer” who begins to raise bids until even the most interested parties have enough strength to bargain. Having won the auction, such a buyer disappears, and you sell the site to the second buyer at his highest bid, often several times higher than the amount offered by the third most active participant. You are not directly accused of the fact that this buyer is a representative of your company, but such accusations are made anonymously. How do you feel about such accusations?

— The winner of the auction has the right to pay for his purchase within 10 days. If the winner does not redeem the name, then he pays a fine, and the right passes to the second. If the second one has not paid within 10 days, then he also pays a fine, and the domain is considered unsold. New auctions are announced, of which all participants are warned. Unfortunately, domain market professionals have a tactic where they fail auctions over and over again. It has been verified that thanks to this, some of those who want to stop participating in them and the price drops. Therefore, although the price at auction is on average 4–6 times lower than the one at which the domain goes to the end user from the hands of resellers, by disrupting the auction they reduce the price by another 4–6 times. We tried to fight this. Unfortunately, we cannot increase the deposit during growing auctions. Since for this it is necessary to suspend trading, and in addition, not all those trading can pay a deposit.

— Is it true that if such “disappearing” buyers appear in auctions for a domain in the .RF zone, the domain will not even be given to the second participant in the auction, but will simply go to you, and you will then put up such names at an open auction For everyone?

— The domain will remain with us only if neither the first nor the second participant buys it. Such a domain is subsequently put up for public auction with notification of everyone who participated in the closed auction. But this is not beneficial for us. From experience, random people come to open auctions, so everything is more uncertain. The largest percentage of sales occur at closed auctions: people come there who have thought about the purchase in advance. Impulse purchases are made less frequently. And among random people there are more of those who are ready to bargain to the end not with the goal of buying, but with the goal of harming their neighbor so that the auction does not take place. It is not in our interests to keep domains ourselves; we are interested in transferring them to clients.

— How many auctions for names in the .RF zone have you already held these days, how much do the rates on them increase on average, and what is the maximum price you have paid for the domain so far?

— There have been no completed auctions yet. The auction has started but is not finished. Their end will approximately be November 23–25.

— Do you have any forecasts of how much you can get after selling all the domains registered on the first day of registration?

— There are no forecasts yet, we will definitely provide information on the results of the auction.