Auction vs Community Priority How New gTLDs Are Awarded

The expansion of the domain name space through the introduction of new generic top-level domains (gTLDs) under ICANN’s New gTLD Program marked a fundamental shift in how digital identities and namespaces are conceived, claimed, and governed. Launched in 2012, the program allowed for a wide array of applicants—from global corporations and entrepreneurs to linguistic communities and non-profit organizations—to apply for custom gTLD strings. With nearly two thousand applications submitted for over a thousand distinct strings, ICANN faced the complex task of determining how to allocate rights to operate a gTLD when multiple parties applied for the same or confusingly similar strings. To address these contention sets, ICANN established a resolution framework centered around two principal mechanisms: community priority evaluation and auctions of last resort. Each approach reflects a different value proposition and governance philosophy, and their implementation has significantly influenced the landscape of the domain name system.

Community priority evaluation (CPE) was designed to recognize and reward applications submitted on behalf of clearly defined communities. The idea was to give preference to applicants who could demonstrate that their proposed gTLD served a specific and well-defined group with a shared interest, particularly when such applications faced competition from commercial or standard applicants. To qualify for community priority, an applicant needed to meet stringent criteria across four areas: community establishment, nexus between the string and the community, registration policies aligned with the community, and documented support from the community. Each criterion was scored by an independent panel, and the applicant needed to achieve a minimum total score of 14 out of 16 to prevail.

The CPE process was rooted in ICANN’s commitment to public interest and inclusivity, seeking to ensure that namespaces representing cultural, linguistic, professional, or social communities were governed by those communities rather than commodified in open auctions. Successful community applicants such as .ngo, .radio, and .hotel were awarded their respective gTLDs without needing to compete financially, thus reinforcing the principle that the domain name space should not be shaped solely by market forces. However, the process proved highly controversial. Many applicants who pursued community priority failed to achieve the required score, citing opaque scoring methodologies, inconsistencies in panel decisions, and an overly rigid interpretation of what constitutes a “clearly delineated” community. Some applicants alleged that the evaluators applied stricter standards than anticipated, excluding legitimate community efforts from receiving priority and forcing them into auctions against well-funded corporate entities.

When no applicant in a contention set was awarded community priority, the remaining applicants were left to resolve the conflict through either a private resolution method or an ICANN-facilitated auction of last resort. In many cases, competing applicants reached private settlements, which could include monetary compensation, joint ventures, or one party voluntarily withdrawing in exchange for incentives. However, when such agreements could not be reached, ICANN conducted ascending-clock auctions, in which applicants placed increasing bids for the right to operate the contested gTLD. The highest bidder won the gTLD, and the proceeds of the auction—over $233 million in total—were held by ICANN in a segregated fund earmarked for future community-benefit initiatives, pending decisions by the community on how to allocate it.

While auctions are efficient and transparent in determining a winner, they inherently favor financially strong entities, raising concerns about the commercialization of the DNS and the exclusion of smaller or mission-driven organizations. Critics argue that auctions reduce TLDs to commodities, enabling speculative acquisition and undermining the diversity of the namespace. The .web auction, which resulted in a $135 million winning bid, became one of the most contentious examples, with lawsuits and prolonged disputes over the legitimacy of the winning applicant’s structure and funding sources. Such controversies have highlighted the need for more robust eligibility verification, disclosure requirements, and safeguards against proxy applications designed to manipulate the auction process.

The contrasting philosophies of community priority and auctions underscore a broader tension in internet governance: the balance between market mechanisms and public interest considerations. Community priority seeks to elevate social value and stakeholder representation, but its rigid criteria and limited success rate have limited its practical impact. Auctions, while procedurally clear and economically rational, risk concentrating control of new gTLDs in the hands of the most capitalized players, potentially marginalizing diverse voices and non-commercial interests in the domain space.

As ICANN considers subsequent rounds of new gTLD applications, the lessons learned from the 2012 round are central to the policy development process. Proposals under discussion include revising the CPE criteria to make them more accessible and predictable, introducing qualitative evaluation options beyond binary pass/fail models, enhancing transparency in the evaluation process, and refining auction procedures to ensure fairness and accountability. Some community members advocate for a broader set of priority mechanisms that recognize other public interest objectives beyond narrowly defined communities, such as applications with significant innovation potential, underrepresented regions, or linguistic and cultural preservation.

The future of gTLD allocation will depend on ICANN’s ability to reconcile the dual imperatives of economic efficiency and social equity. The auction versus community priority dichotomy reflects deeper questions about who should govern the digital namespaces that shape online identity and access. Whether through improved community protections, tiered application tracks, or alternative dispute resolution models, the next generation of gTLD policy will need to better accommodate the diversity of applicants and ensure that the DNS remains a truly global and inclusive resource.

The expansion of the domain name space through the introduction of new generic top-level domains (gTLDs) under ICANN’s New gTLD Program marked a fundamental shift in how digital identities and namespaces are conceived, claimed, and governed. Launched in 2012, the program allowed for a wide array of applicants—from global corporations and entrepreneurs to linguistic communities…