Web-Name Expansion Could Be ‘Disaster,’ FTC Chairman Says

By Eric Engleman and Jeff Bliss - Dec 8, 2011 4:25 AM GMT+0700

A plan to add hundreds of Internet domain names beyond .com and .net may be a “disaster,” U.S. Federal Trade Commission Chairman Jon Leibowitz told a House Judiciary subcommittee.

The program is more costly than necessary for businesses and would let con artists set up fraudulent websites, Leibowitz said today in a hearing of the House Subcommittee on Intellectual Property, Competition and the Internet.

The domain-name system expansion, authorized by the Internet Corporation for Assigned Names and Numbers, “could be very harmful,” Leibowitz said. “We see enormous cost to consumers and businesses and not a lot of benefit.”

Icann, a non-profit that manages the Web’s address system under a U.S. Commerce Department contract, approved a plan in June to expand the number of top-level domains beyond the commonly used .com, .net and .org in a move to spur online innovation.

The group will start accepting applications for Web suffixes including company and brand names, cities and words like .book or .shopping, starting Jan. 12 for a three-month window. Applications will cost $185,000 for each domain.

General Electric Co. (GE), Johnson & Johnson (JNJ) and Coca-Cola Co. are among more than 40 companies that last month joined with the Association of National Advertisers to oppose the expansion, saying it will increase costs for companies, confuse customers and create new risks of Internet fraud.

Monitoring Program

“We appreciate the concerns raised by Chairman Leibowitz,” Brad White, a spokesman in Washington for Marina del Ray, California-based Icann, said in an e-mail.

“Icann has already committed to vigilantly monitor for abuses” to the new domain program, White said. “If and when any program abuses arise, there are mechanisms in place to address them.”

The Commerce Department is “sensitive to the concerns being raised by some companies” about the introduction of the new top-level domains, Assistant Secretary of Commerce Lawrence Strickling said in an e-mail today.

“We will closely monitor the execution of the program and are committed to working with stakeholders, including U.S. industry, to mitigate any unintended consequences,” Strickling said, without elaborating.

The Senate Commerce Committee, led by Senator Jay Rockefeller, a West Virginia Democrat, is scheduled to hold a hearing tomorrow on the domain expansion program, with witnesses from Icann, the Commerce Department and the advertisers’ group. The House Energy and Commerce Committee also plans to hold a hearing on the Icann program next week.

The FTC doesn’t have authority over Icann. The agency has the power to act when companies engage in unfair and deceptive trade practices.

To contact the reporters on this story: Eric Engleman in Washington at eengleman1@bloomberg.net; Jeff Bliss in Washington at jbliss@bloomberg.net

To contact the editors responsible for this story: Michael Shepard at mshepard7@bloomberg.net; Mark Silva at msilva34@bloomberg.net