ICANN Governance And Market Power Concerns

1. Introduction

The Internet Corporation for Assigned Names and Numbers (ICANN) occupies a distinctive position in the digital economy. It is not a conventional commercial platform, registrar, or domain-name seller. Rather, it coordinates critical elements of the Domain Name System (DNS), including the creation and allocation of top-level domains (TLDs), accreditation of registrars, registry agreements, and related technical and policy rules.

This creates an unusual competition-law problem: ICANN can exercise substantial influence over markets without necessarily participating in those markets as a conventional competitor.

The central concern is therefore not simply whether ICANN has a monopoly, but whether its governance decisions can:

• determine who may enter DNS-related markets;
• influence the number and structure of TLDs;
• affect registry and registrar competition;
• create or reinforce incumbency advantages;
• determine access to DNS infrastructure and data;
• influence prices and contractual conditions;
• favor some applicants or registry operators over others;
• create barriers to alternative naming systems; and
• allow private governance decisions to have effects comparable to regulation.

ICANN itself maintains a substantial record of litigation concerning these issues.

2. Why ICANN Creates a Competition-Law Problem

The conventional competition-law model asks:

Does an undertaking possess market power and has it abused that power?

ICANN complicates this question because it performs a governance function rather than simply selling a product.

Its decisions may nevertheless determine the competitive environment in which registries, registrars, domain-name investors, hosting companies and other digital businesses operate.

A useful distinction is:

A. Direct market power

This exists where the entity itself supplies the relevant product or service and can profitably restrict competition.

B. Governance power

This exists where an organization controls the rules, accreditation, access conditions or infrastructure that determine how others compete.

ICANN litigation has repeatedly confronted this distinction. In name.space v. ICANN, for example, the Ninth Circuit accepted that ICANN was not itself a competitor in the relevant markets identified by the claimant, even though its decisions affected those markets.

This produces an important principle:

Regulatory or governance influence is not automatically equivalent to antitrust market power.

But that does not mean governance decisions are immune from competition scrutiny.

3. Relevant Markets

ICANN-related competition disputes can involve several overlapping markets.

3.1 TLD registry market

This concerns the operation of registries for extensions such as:

• .com
• .net
• .org
• .shop
• .web
• .xxx
• country-code domains.

The central issue is whether ICANN's allocation and contractual rules facilitate or restrict entry.

3.2 Domain-name registration market

Registrars compete to provide domain-name registration services to customers.

ICANN's accreditation rules therefore affect the competitive conditions faced by registrars.

3.3 Domain-name ecosystem

A broader market may include:

• domain registration;
• DNS services;
• hosting;
• website services;
• security services;
• domain brokerage;
• defensive registration.

3.4 Alternative naming systems

A more difficult question concerns systems outside the conventional ICANN DNS.

The relevant competition question becomes:

Are alternative naming architectures genuine substitutes for ICANN-governed domains?

This issue becomes particularly important with blockchain-based naming systems and decentralized naming protocols.

4. Structural Sources of ICANN-Related Market Power

A. Control over entry

ICANN determines or substantially influences the process through which new TLDs enter the authoritative DNS.

Consequently, the organization can affect:

• the number of TLDs;
• application requirements;
• application costs;
• technical requirements;
• contractual conditions;
• evaluation criteria.

High entry costs can particularly disadvantage smaller organizations.

B. Network effects

Domain names benefit from strong network effects.

A TLD becomes more valuable when:

1. more businesses use it;
2. more consumers recognize it;
3. more browsers and search systems accommodate it;
4. more infrastructure supports it.

This can make incumbent TLDs difficult to challenge.

The .com ecosystem illustrates the problem. Arguments made in ICANN-related proceedings have emphasized that .com can possess significant advantages over alternative TLDs because users may perceive alternatives as imperfect substitutes.

C. Switching costs

Domain-name switching can involve:

• rebranding;
• search-engine effects;
• customer confusion;
• advertising costs;
• email migration;
• cybersecurity risks;
• contractual changes.

Consequently, even if alternative TLDs formally exist, they may not impose strong competitive constraints.

5. Six Major Case Laws

1. Name.Space, Inc. v. ICANN

Background

Name.Space challenged ICANN's New gTLD Program and particularly objected to the rules and application fee associated with the 2012 new-gTLD round.

The claimant alleged that ICANN had violated U.S. antitrust law, including the Sherman Act.

One significant allegation concerned the US$185,000 application fee and the alleged exclusionary effects of ICANN's rules.

Decision

The federal district court dismissed the claims, and the Ninth Circuit affirmed.

A particularly important conclusion was that ICANN was not a competitor in the relevant markets identified by the plaintiff, including:

• TLD registry operation;
• the international domain-name market;
• defensive registration services. 

Competition-law significance

This case demonstrates the distinction between:

having the ability to influence competition and being a competitor possessing conventional market power.

It also demonstrates the difficulty of applying traditional Section 2 monopolization concepts to private governance organizations.

Principle

ICANN's control over rules affecting a market does not automatically make ICANN a monopolist in that market.

2. VeriSign, Inc. v. ICANN

This litigation is particularly important for understanding the relationship between ICANN governance and registry power.

Background

VeriSign challenged ICANN's restrictions and contractual conditions concerning its operation of major TLD registries.

The allegations included claims concerning:

• restrictions on services;
• pricing;
• conditions imposed on registry operations;
• delays concerning new services;
• alleged anticompetitive restrictions. 

Competition issue

The central structural problem was unusual:

ICANN governed an organization—VeriSign—that operated a critical DNS registry, while simultaneously setting contractual conditions affecting competition.

This created a potential conflict between:

• DNS stability;
• consumer protection;
• registry governance;
• competition;
• innovation.

Significance

The case illustrates that contractual regulation of a dominant infrastructure operator can have competition-law consequences even where the regulator itself is not a market participant.

It therefore provides an important foundation for analysing modern digital infrastructure governance.

3. Manwin Licensing International v. ICM Registry, LLC / ICANN

Background

The dispute concerned the .xxx TLD.

Manwin challenged aspects of the creation and operation of the .xxx registry and alleged anticompetitive conduct involving ICANN and ICM Registry.

The allegations included:

• suppression of competing adult-content TLDs;
• restrictions on competition;
• allegedly excessive pricing;
• output restrictions;
• allocation of contractual authority affecting competitive conditions. 

Procedural outcome

The litigation ultimately resulted in dismissal with prejudice in 2013.

Competition significance

The case is important because it demonstrates how TLD allocation itself can become a competition issue.

The question is not merely:

"Who owns the TLD?"

Instead, the competition question becomes:

Does the process for allocating and governing a TLD restrict competing suppliers or create an artificial monopoly?

Principle

Where a private governance organization allocates scarce digital infrastructure, allocation decisions can have exclusionary effects even when the organization does not sell the underlying service itself.

4. Image Online Design, Inc. v. ICANN

Background

Image Online Design was involved in litigation concerning alternative domain-name systems and the development of competing TLD arrangements.

An earlier related proceeding, Image Online Design, Inc. v. CORE Association, concerned competing approaches to TLD development and DNS administration. The court granted summary judgment for CORE.

Image Online Design subsequently brought litigation directly involving ICANN, which was dismissed in 2013.

Competition significance

The litigation illustrates an important historical question:

Can a centralized DNS governance model prevent alternative naming architectures from achieving effective market entry?

This is particularly relevant today because competition increasingly comes not only from another traditional TLD but also from:

• blockchain naming;
• decentralized identifiers;
• alternative root systems;
• application-specific naming networks.

Principle

The existence of alternative technology does not necessarily establish a competitive substitute if interoperability, consumer recognition and universal accessibility remain weak.

5. Commercial Connect, LLC v. ICANN

Background

Commercial Connect was involved in disputes concerning the allocation of the .shop TLD and ICANN's new-gTLD processes.

The dispute included challenges to ICANN's treatment of applications and allocation decisions.

The federal court ultimately granted ICANN's motion to dismiss in April 2016.

A subsequent independent-review proceeding concerning .SHOP was also terminated in 2017.

Competition significance

This case demonstrates the importance of TLD allocation as a competitive bottleneck.

Where several businesses seek the same TLD, ICANN effectively determines which applicant obtains access to a valuable piece of DNS infrastructure.

This creates questions concerning:

• transparency;
• equal treatment;
• auction mechanisms;
• evaluation criteria;
• conflicts of interest;
• procedural fairness;
• entry barriers.

Principle

Control over allocation can influence competitive structure even where the allocating organization does not itself compete downstream.

6. DotConnectAfrica Trust v. ICANN

Background

DotConnectAfrica sought the .AFRICA TLD.

It challenged ICANN's decision concerning the application and argued that ICANN's governance process had improperly disadvantaged its application.

The dispute involved ICANN's interaction with the Governmental Advisory Committee and the New gTLD Program Committee.

Important governance finding

An ICANN Independent Review Panel expressed concerns regarding:

1. the lack of an adequate rationale underlying governmental advice; and
2. ICANN's failure to undertake sufficient diligence concerning the transparency and manner in which the advice was developed. 

The dispute subsequently generated extensive court proceedings, including summary-judgment litigation and appellate proceedings.

Competition significance

This case is particularly important because governance legitimacy itself can affect competitive neutrality.

If an application process is:

• opaque;
• politically influenced;
• procedurally inconsistent; or
• inadequately reasoned,

then competition among potential registry operators can be distorted.

Principle

Procedural neutrality is a component of competitive neutrality in infrastructure governance.

7. Register.com, Inc. v. Verio Inc.

Although this case was not principally an antitrust case against ICANN, it is highly relevant to ICANN governance.

Background

Register.com sought an injunction against Verio concerning automated access to and use of registrant information contained in WHOIS databases.

ICANN participated as an amicus curiae and argued that Verio's practices were inconsistent with ICANN policies and contractual arrangements.

The court granted an injunction, and the Second Circuit subsequently affirmed it.

Competition significance

The case illustrates ICANN's role in creating contractual and policy rules governing access to critical DNS-related information.

This raises a broader competition issue:

When does control over information infrastructure become control over an economically significant input?

That question is increasingly important for modern digital markets involving:

• APIs;
• data portability;
• interoperability;
• identity infrastructure;
• access credentials;
• authentication systems.

8. Core Competition-Law Concerns

A. Gatekeeper power

ICANN can function as a gatekeeper to participation in authoritative DNS governance.

The concern is particularly strong where access depends on:

• accreditation;
• contractual approval;
• technical standards;
• application procedures;
• registry agreements.

B. Entry barriers

Potential barriers include:

Financial barriers

Large application and evaluation costs.

Technical barriers

Infrastructure and security requirements.

Procedural barriers

Complex application and review procedures.

Reputation barriers

Established TLDs may possess substantial consumer recognition.

Network barriers

A new TLD must achieve sufficient adoption to become commercially meaningful.

9. ICANN and the Essential-Facility Analogy

ICANN should not automatically be characterized as an essential facility.

Traditional essential-facilities doctrine normally requires a facility that is:

1. controlled by a dominant firm;
2. practically impossible to duplicate;
3. necessary for effective competition; and
4. capable of being supplied to competitors.

ICANN's institutional structure does not fit this model neatly.

Nevertheless, the functional analogy is useful.

DNS governance may resemble essential infrastructure because:

• universal reachability matters;
• interoperability is essential;
• fragmentation can reduce utility;
• alternative roots may not be recognized universally.

Thus, the stronger argument is not necessarily:

"ICANN is an essential facility."

Rather:

ICANN governs infrastructure whose universal interoperability can generate bottleneck effects.

10. ICANN and Vertical Foreclosure

ICANN's relationships with registry operators and registrars raise potential vertical-foreclosure concerns.

Consider a simplified structure:

ICANN → Registry → Registrar → Consumer

If contractual conditions disproportionately favor an incumbent registry, competitors could face:

• higher costs;
• reduced access;
• slower innovation;
• discriminatory treatment;
• reduced opportunities to launch competing services.

The competition inquiry would therefore examine whether governance rules create artificial competitive advantages.

11. ICANN and Pricing Power

Pricing presents a particularly difficult problem.

ICANN does not ordinarily operate like a traditional retailer. Nevertheless, its contractual arrangements can affect:

• registry fees;
• application costs;
• renewal economics;
• accreditation costs;
• contractual restrictions.

The .com ecosystem illustrates why pricing is controversial. The market-power argument is strengthened when consumers view .com as poorly substitutable with alternative TLDs and face significant switching costs.

Therefore:

formal availability of alternatives ≠ effective competitive constraint.

12. ICANN and Competition Neutrality

A major modern concern is competition neutrality.

A governance institution should ideally avoid giving one market participant an unjustified advantage.

Potential neutrality problems include:

13. ICANN as a Private Regulatory Institution

ICANN is particularly interesting from a competition-law perspective because it represents a form of private regulatory governance.

Its decisions may resemble regulation because they can determine:

• who can enter;
• who can operate;
• what contractual terms apply;
• what technical standards are required;
• what information must be available;
• how disputes are handled.

But ICANN is not equivalent to a conventional government competition authority.

This creates an accountability gap:

If a private organization exercises regulatory-like power, what prevents its governance decisions from becoming instruments of market foreclosure?

That is one of the central competition-policy questions surrounding ICANN.

14. ICANN and Digital Constitutionalism

The issue goes beyond traditional antitrust.

ICANN can be understood as an example of digital constitutional governance, because it creates rules governing a globally significant infrastructure.

Three principles become particularly important:

1. Transparency

Stakeholders should understand how important allocation decisions are made.

2. Procedural fairness

Comparable applicants should receive comparable treatment.

3. Competitive neutrality

Governance mechanisms should not unnecessarily favor incumbents.

The DotConnectAfrica proceedings are particularly significant in this context because concerns about transparency and reasoning arose directly in connection with ICANN's decision-making process.

15. ICANN and the Modern Platform Economy

The ICANN problem has become more important because domain names increasingly interact with:

• cloud platforms;
• search engines;
• cybersecurity;
• digital advertising;
• online marketplaces;
• AI services;
• digital identity;
• blockchain;
• decentralized applications.

Control over naming infrastructure can therefore affect markets far beyond domain registration itself.

A future competition authority may have to consider ecosystem effects rather than examining domain registration in isolation.

16. The Central Legal Test

A useful framework for analysing an ICANN-related competition problem is:

Step 1 — Identify the relevant market

Is the relevant market:

• TLD registry services?
• domain registration?
• specific TLDs?
• DNS infrastructure?
• naming services?
• alternative naming systems?

Step 2 — Identify the actor

Is the allegedly restrictive conduct attributable to:

• ICANN;
• a registry;
• a registrar;
• a government;
• a governmental advisory body;
• several participants jointly?

Step 3 — Identify the governance mechanism

Determine whether the conduct involves:

• accreditation;
• allocation;
• contractual restrictions;
• pricing;
• technical standards;
• data access;
• renewal;
• dispute resolution.

Step 4 — Determine competitive effect

Ask whether the conduct:

• excludes rivals;
• raises rivals' costs;
• increases switching costs;
• protects incumbents;
• reduces innovation;
• limits consumer choice.

Step 5 — Consider legitimate objectives

ICANN can justify restrictions by reference to:

• DNS security;
• stability;
• technical interoperability;
• cybersecurity;
• abuse prevention;
• operational reliability.

The crucial question is whether the restriction is necessary and proportionate.

17. Key Doctrinal Lessons From the Cases

The six principal ICANN-related cases reveal several recurring principles.

First

Governance power is not automatically market power.

Name.Space is particularly important because the court found ICANN was not itself a competitor in the identified markets.

Second

DNS allocation decisions can have competitive consequences.

Commercial Connect, Manwin, and DotConnectAfrica demonstrate how allocation and procedural decisions can determine which entities obtain access to commercially significant TLD opportunities.

Third

Incumbent registry power remains a separate issue from ICANN's governance power.

The VeriSign v. ICANN disputes demonstrate this distinction.

Fourth

Procedural fairness can affect competitive neutrality.

DotConnectAfrica illustrates the importance of transparent and reasoned decision-making.

Fifth

Infrastructure governance can indirectly determine downstream competition.

Register.com v. Verio demonstrates how ICANN's policies and contractual architecture can influence access to DNS-related information and conduct.

18. Emerging Competition Issues

The traditional ICANN cases may become increasingly relevant to new technologies.

A. Blockchain domains

Competition authorities may have to determine whether decentralized naming systems constitute substitutes for ICANN domains.

B. Alternative roots

If alternative DNS roots become commercially viable, ICANN's role could increasingly be evaluated under interoperability and exclusion theories.

C. AI agents

AI agents may increasingly register, manage and transfer domains autonomously, creating questions concerning:

• automated registration;
• domain hoarding;
• algorithmic allocation;
• automated renewal;
• pricing.

D. Digital identity

The convergence of DNS and digital identity could make naming infrastructure more economically significant.

E. Cybersecurity

Security requirements can be legitimate but could also theoretically become barriers to entry if designed disproportionately.

19. Overall Assessment

ICANN presents a hybrid competition-law problem.

It is not simply a monopolist. Nor is it merely a neutral technical organization.

Its importance comes from its ability to structure the competitive environment in which other market participants operate.

The strongest concerns arise where:

governance power + network effects + switching costs + scarcity + contractual control

combine to produce durable competitive advantages.

The principal lesson from the case law is that courts have generally been reluctant to equate ICANN's governance authority with conventional antitrust market power. Name.Space v. ICANN is particularly clear on this point.

However, this does not eliminate competition concerns. Instead, it shifts the legal inquiry toward:

• exclusionary governance;
• discriminatory allocation;
• procedural neutrality;
• contractual foreclosure;
• incumbent protection;
• access to critical infrastructure;
• interoperability; and
• the competitive effects of private regulation.

Conclusion

ICANN governance and market power concerns arise from the unusual position of ICANN as a private, globally significant coordinator of critical Internet infrastructure.

The most important competition-law issue is therefore not simply whether ICANN itself possesses monopoly power. It is whether ICANN's governance mechanisms can create, preserve, transfer, or amplify market power held by registry operators, registrars or other ecosystem participants.

The leading disputes—Name.Space v. ICANN, VeriSign v. ICANN, Manwin v. ICM/ICANN, Image Online Design v. ICANN, Commercial Connect v. ICANN, DotConnectAfrica v. ICANN, and Register.com v. Verio—collectively demonstrate the tension between DNS stability and competition, private governance and accountability, and technical coordination and market neutrality.

In competition-law terms, ICANN is best understood as a potential “market-structuring gatekeeper,” rather than simply a conventional monopolist. That distinction is likely to become increasingly important as DNS governance intersects with decentralized naming, digital identity, AI agents, cybersecurity and other digital infrastructures.