"ICANN condones private auctions, as it has encouraged applicants to resolve contention themselves, presumably through buy-outs, partnerships, and auctions. ICANN offers its own auction model as a last resort. All proceeds from gTLDs auctioned off under ICANN's auction model will go to ICANN as "excess funds" that will be redistributed at a later date, in ways that are yet to be determined.[2] "
"The first ICANN auction of last resort was concluded on 4 June 2014 for the string .信息 which had two applicants. The winning price was $600,000 US Dollars. ICANN used their authorized auction services provider Power Auctions, LLC to carry out the auctions."
So looks like you are incorrect.
> The winner will pay the amount of the second-highest bid, split either equally or proportionally between the losing applicants
And if you look at the news articles from the time that .blog was auctioned -- like http://domainincite.com/17991-blog-won-in-eight-figure-aucti... -- Minds + Machines, one of the losing bidders, revealed that they had received 3.4 million dollars after pulling out of the bidding for both `.blog` and `.store`
Also, apart from all the above which is public knowledge and there for you to find on your own, I work for Automattic, and when I checked with those who were involved with the .blog purchase, he confirmed that the winning bid was dispersed to the losing bidders. All in all, not a bad consolation prize.
If we can get older blogs and new blogs onto the .blog namespace, then this will free up .com for what it was intended for; companies.
You're really looking for a problem where there is none.
Also, I don't know that I'd call this extortion, no one is forcing people to buy up these new TLDs.
A cash grab, however...
