Grumpy, but not sure why — the battle over domain names

The federal government has given auDA — the company managing Australia’s internet domain names — three months to develop new processes to redress historical weaknesses in its governance. This follows a report from the Department of Communications and the Arts that found the organisation no longer fit for purpose.

auDA has been mired in controversy in recent years. For quite some time though it had been seen as a tightly held fiefdom under the control of a board of directors elected from within the industry and fraught with conflicts of interest.

A Special General Meeting is scheduled for 27 July 2018. It was brought on by a call from a dissident group known as the Grumpies that is seeking a partial board spill. It seems unlikely they’ll succeed, but in any case the result will be moot given that the current board will be replaced once the new regime is in place.

Last week auDA brought in a team of external facilitators to run a member consultation session. Only about a dozen people showed up in person and about the same number attended online. This suggests claims of widespread disquiet among the auDA constituency might be a tad overblown.

One of the Grumpies staged a short-lived insurgency, demanding to have on-the-spot assurances auDA would take seriously the work of the group and threatening to leave. The facilitators deftly diffused the situation, with the assistance of another attendee who diplomatically suggested the recalcitrant just calm down. He stayed and actually contributed constructively.

Sadly, this lone Grumpy failed to shed any light on what they think is wrong with the way domain names are currently allocated. One of their frequently trotted-out complaints is regarding the so-called “direct registration” of .au domains. Ironically, this proposal was actually raised by a previous board. The current independent auDA chair, Melbourne businessman Chris Leptos, has advised members that no decision will be taken on the matter until the second half of 2019, at the earliest.

In the end, last week’s session was extremely civil and led to what looked like an outcome palatable to most, if not all, the participants — and I suspect to the broader auDA membership. In summary, the clearly preferred future membership structure would involve a “Single Member Class Model … through which any individual, corporate, or institution could join with equal weighting”. The membership would collectively elect a certain number of board directors, yet to be determined.

The government has laid down some non-negotiable requirements for the new auDA governance regime. One of these is a majority of independent directors on the board. Thus, irrespective of how they are determined, the member-elected directors will not be able to capture control of the board — another one of the requirements for satisfying the government.

An important issue that indirectly arose as we discussed the proposed changes was the need for some to better understand a key provision of the corporations laws. Irrespective of how they are appointed, or by whom they are nominated, all directors are required to act in the best interests of the company. They are not there to represent, or advocate, the specific interests of their nominator. Having a majority of independent directors will hopefully ensure that vested interests are kept out of the auDA board room.

It seems to me that what we are dealing with here is simply a long-running battle for board control overlaid with a matrix of even longer-standing interpersonal grievances. No wonder the Communications department concluded that auDA needs reform. However, it strains credulity to suggest that the problems concerning the government have only recently developed. Certainly from what others with a longer involvement with auDA tell me.

According to the facilitators of last week’s member session, there will be further consultations before the auDA board takes a reform proposal to the government. Common sense says it would be good if the Grumpies agreed to call off the SGM and save the members’ money. The last thing auDA needs right now is any more public disquiet.

Laurie Patton is a member of auDA and the former CEO/Executive Director of Internet Australia. He is currently advising Afilias Australia, the company that took over the management of the .au registry for auDA from 1 July 2018. However, the views expressed here are his own and have not been endorsed by Afilias.