Internet governance under attack: what’s happening and why business should care

April 2014 | SPOTLIGHT | RISK MANAGEMENT

Financier Worldwide Magazine

While most businesses are busy dreaming up new and creative ways they can exploit the internet to reach customers, very few pay any attention to how the internet works or to how, or by whom, the internet is governed. They know it’s there; and for them, that’s enough. But what if businesses were suddenly to learn that the continued existence of the internet as they know it is anything but assured? Listen up: the internet, and those organisations which have, for several decades, managed and made the policies that govern its operations, are under serious attack.

Internet Governance (IG) is a complex and somewhat messy affair, involving several intergovernmental and nongovernmental organisations with loosely coordinated and sometimes overlapping responsibilities. Perhaps the best known organisation is ICANN (the Internet Corporation for Assigned Names and Numbers), a California non-profit responsible for the domain name system (DNS), and the IANA ‘root zone’ system, which together enable communication and allow the internet to function as a seamless network. ICANN and certain other IG organisations were designed to operate on a ‘multistakeholder model’, where representatives of technical, academic, business and not-for-profit sectors, civil society and governments all have a say in the decision-making process.

If businesses have even heard of ICANN, it is most likely in relation to ICANN’s decision a few years ago to expand exponentially the number of top level domains (the letters to the right of the dot in an internet address). This ‘New gTLD Program’ is highly controversial and ICANN has gambled on a plan whose success is far from assured. However, the new gTLDs are no longer the most pressing concern of ICANN or of the other organisations that, together, manage the internet.

IG, and the roles of ICANN and the US government, are now fraught with controversy. Certain foreign governments and various other stakeholders believe that the United States wields a disproportionate share of power in ICANN and in IG generally, which is then used by the US for its own geopolitical purposes.

To be sure, the US has a ‘unique relationship’ with ICANN, stemming from the internet’s origins as a US military, and then academic, project. That relationship is reflected both through the ‘Affirmation of Commitments’, a quasi-contractual document between ICANN and the National Telecommunications and Information Administration (NTIA) that spells out ICANN’s responsibilities relating to the DNS and another contract which entrusts to ICANN management of the root zone system and related internet ‘plumbing’. This special relationship has long been controversial with some foreign governments and other non-US actors.

This issue has simmered for years. Edward Snowden’s massive security leaks, however, have caused the controversy to boil over. Whether out of genuine concern, or as a convenient excuse, Snowden’s revelations have resulted in declarations from multiple governments of a ‘lack of trust’ in the US’ unique role as steward of the internet. As a consequence, the current structure of IG is under attack in an unprecedented fashion, not only by BRIC nations, but also by traditional allies, like the European Union.

There have been serious calls to move ICANN out of the US, to put the US on an ‘equal footing’ with other governments vis-a-vis the internet’s essential elements and even to move key responsibilities from ICANN, perhaps to the International Telecommunications Union (ITU), a UN organisation currently dominated by Russia, China and a block of developing nations. Whatever anyone’s true motivations, the call for change has reached fever pitch and must be taken seriously.

In October 2013, several IG organisations released the ‘Montevideo Statement’, calling for “accelerating the globalization of ICANN and IANA functions”, and Brazil called for a ‘Global Multistakeholder Meeting on the Future of the Internet’ (NetMundial) being held in late April, where these issues will be front and centre. There is now constant activity taking place on IG ‘reform’.

The end result could significantly impact the internet of tomorrow, potentially bringing fragmentation, changes in ‘net neutrality’ (equal access to internet connectivity), greater government controls and shifts in spheres of influence. It is likely that such changes would result in an internet that is less ‘business-friendly’, more costly, with higher barriers to international communication and an environment where it is more difficult for businesses to track down trademark infringers, counterfeit sales sites, data thieves, etc.

Alarmingly, the private sector, with only a few exceptions, seems oblivious to the debate and, by the time it realises what is happening, it might well be too late. Other stakeholder groups, and governments, are far more engaged in the IG debate. Unless the business community joins the debate energetically and expeditiously, other stakeholders, acting in their own self-interests, will carry the day and the internet as businesses know it could well become a thing of the past.

This issue, and its long-term strategic and policy implications, should be commanding the attention of C-suites everywhere. The business community stands aside at its own risk. The worst possible result would be for the IG tug-of-war to yield results that are bad for business before the business community even awakens to the threat. There is still time, though, to shape the debate and impact the result. But business needs to organise, to lobby, to engage with organisations, consultants and attorneys already in the ICANN and IG world, in order to be represented in the debate and raise their collective voices before it’s too late.

Gregory S. Shatan and Judith L. Harris are partners at Reed Smith LLP. Mr Shatan can be contacted on +1 (212) 549 0275 or by email: gshatan@reedsmith.com. Ms Harris can be contacted on +1 (202) 414 9276 or by email: jlharris@reedsmith.com.

Gregory S. Shatan and Judith L. Harris

Reed Smith LLP