The Sketchy, Sketchy Case Of ICANN Execs And Self-Dealing Regarding The .Org Domain

from the this-looks-bad dept

Earlier this month, within the domain name world, there were significant concerns raised upon the news that Internet Society (ISOC), the (perhaps formerly?) well-respected nonprofit that helps “provide leadership in Internet-related standards, education, access, and policy” had agreed to sell off the Public Interest Registry, which is the registry that manages all .org top level domain (TLD) names, to a private equity company called Ethos Capital. Just having a public interest nonprofit selling off a part of its operations to a private equity group would be trouble enough, but the details make the story look much, much worse.

Just a few months ago, ICANN, a different non-profit that is in charge of coordinating and managing the various top level domain namespaces, and figuring out who gets to manage the associated registries (and, which has been subject to years of controversy regarding poor accountability and transparency, along with accusations of self-dealing), had announced that it was eliminating the price caps on the .org TLD. For most of the past decade, the ICANN agreement regarding the .org TLD space had held that .org domains had a maximum top price of $8.25 per year per domain.

ICANN claimed that it was making changes to the .org contract to “better conform” with the base registry agreement that ICANN had with other TLDs, tons of which have come on the market over the past few years. However, seeing as the .org TLD is one of the oldest ones on the web, and which has generally been considered (though, not exclusively) to be used for things like non-profits and community organizations, many people were reasonably concerned about the lifting of the price cap. Indeed, in response to ICANN’s request for comment, the comments went overwhelmingly against the removal of the price cap.

But ICANN did it anyway.

And, then, just a few months later, the Internet Society sells off the registry to a private equity firm.

And it gets worse. Remember how I mentioned earlier the years-long concerns about ICANN and self-dealing?

Ethos Capital is a new private equity firm lead by Erik Brooks. Brooks was at Abry Partners until earlier this year. Abry Partners acquired Donuts and installed former ICANN President of Global Domains Akram Atallah in the top spot there.

Donuts co-founder Jon Nevett left to be CEO of Public Interest Registry.

The other person at Ethos is former ICANN Senior Vice President Abusitta-Ouri.

Ethos appears to have just been founded. It acquired the domain name EthosCapital.com at the end of October through Afternic.

Oh, and it gets even worse:

Despite stating that Ethos Capital ?understands the intricacies of the domain industry? its founder and CEO Erik Brooks has no experience within that industry. The firm?s website lists only Brooks and one Nora Abusitta-Ouri ? who joined the outfit last month as its ?chief purpose officer? ? as employees.

But there is a common thread between those two and it is Fadi Chehade, a former CEO of ICANN, the organization that oversees the domain-name system and awards the contracts to run internet registries.

It was under Chehade that ICANN radically changed its approach to internet registries, including a massive expansion of the internet namespace and a move toward a free market approach to internet addresses.

Oh, and it gets even worse. While Ethos Capital does not list Chehade as an employee, it appears that he started the organization:

On May 7 this year, Fadi Chehade appears to have registered EthosCapital.org. He is listed as the owner in Whois. That was just before a Delaware company by the name Ethos Capital, LLC was formed.

May 7th, eh? the timing is notable:

That date is significant because it is one day after ICANN indicated it was planning to approve the lifting of price caps through its public comment summary.

In case you were wonder about the “thread” that ties Brooks, Abusitta-Ouri and the CEO of Public Interest Registry:

The founder of Ethos Capital is Erik Brooks. He left ABRY Partners this year after spending two decades at the investment firm.

Does the name Abry ring a bell? That?s because it?s the company that bought new top level domain name company Donuts last year.

That deal involved Abry Senior Advisor Fadi Chehade. Chehade is the former CEO of ICANN, the group that oversees the domain name industry.

Now we have a twenty year veteran of Abry, who worked on the Donuts deal and was (or still is) a member of Donuts? board, leaving this year to form a new entity that buys a registry, much like how Abry bought Donuts.

And the CEO of Public Interest Registry is Jon Nevett, one of the founders of Donuts.

Oh, and:

The other person listed on Ethos Capital?s website is Nora Abusitta- Ouri. She worked for Chehadi at ICANN as SVP, Development and Public Responsibility Programs.

In other words, the folks involved here are all very closely connected, and it happened right after ICANN, going against the public’s clearly stated interests, suddenly made the .org domain space much more open to profit exploitation. The whole thing is incredibly sketchy.

And while Ethos Capital has put out a meaningless statement promising to keep the .org domain space “accessible and reasonably priced for all” and to “live within the spirit of historic practice when it comes to pricing,” though admitting it might start adding in “annual price increases of up to 10 percent on average.”

Even if everything is aboveboard, the entire sequence of events sure looks incredibly sketchy, and no one involved has done anything to address the concerns about how this all went down. Internet Society insists that Ethos Capital only just approached it about buying PIR a couple months ago, but given the dates and activities described above, it’s reasonable to infer that Ethos was planning this out from about the time that ICANN decided it was going to drop the price cap on .org domains.

As more and more anger rose about this whole mess, ISOC is trying to calm the waters by (somewhat hilariously) launching an entire website called KeyPointsAbout.org in which it tries to defend this mess:

Under the new ownership, PIR?s operation of .ORG will continue as usual with the same excellent management team and reliable backend registry operator. There will be no disruption of services to the .ORG Community.

Both PIR and Ethos Capital are committed to ensuring a smooth and seamless transition, and to continuing the community orientation and strong social purpose of the .ORG and PIR. Ethos is enthusiastic about developing new services and support to serve the .ORG Community.

It also insists that the lifting of price caps had absolutely nothing to do with this, and that this wasn’t all planned out in advance, but in September — a claim that almost no one believes. The one “new” fact in this statement is finally admitting what everyone already suspected, that Chehade is associated with Ethos Capital as an “adviser” though it downplays that role and tries to talk up how he advises lots of companies. Thing is, mere “advisers” aren’t usually the people registering the domain names…

Separately, it’s now been revealed who is financing this whole thing:

… the bulk of the money would come from the investment vehicles of renowned US Republican billionaires: Perot Holdings, tied to former presidential candidate Ross Perot; FMR LLC, closely associated with the Johnson family, one of the Republican Party?s biggest backers; and Solamere Capital, tied to Republican senator Mitt Romney.

Congrats, Senator Romney, on buying up the public interest part of the internet.

That same article, from the Register notes, disappointingly, that Vint Cerf, is supporting this move and even insisting that if Ethos raised the prices of .org domains to $60/year that’s not such a big deal:

Asked on the ISOC members list about the risks of .org domain holders facing domains as much as $60 a year, Cerf surprised many when he responded: ?Hard to imagine that $60/year would be a deal breaker for even small non-profits.?

[….]

That comment prompted [co-founder of the .eco top-level domain Jacob] Malthouse to point out that $60 is the equivalent of two weeks? wages in sub-Sahara Africa, where a large number of non-profits rely on their internet presence for awareness of their efforts.

All in all this is a bad look from an organization and individuals with a history of questionable deal-making and accusations of self-dealing. It’s disappointing to see Cerf support this deal.

Filed Under: , , , , , , , , ,
Companies: ethos capital, icann, isoc, pir, public interest registry

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Comments on “The Sketchy, Sketchy Case Of ICANN Execs And Self-Dealing Regarding The .Org Domain”

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31 Comments
Anonymous Coward says:

Re: Good lord, this is bad news!

Will this mean that nonprofits such as Wikimedia and Gutenberg are going to be more expensive to maintain?

Yes, perhaps by tens of dollars per year eventually. That’s nothing for Wikipedia, and not much for Gutenberg. As the article notes, it’s foreign organizations that will be most affected.

This comment has been deemed insightful by the community.
TKnarr (profile) says:

Re: Re: Good lord, this is bad news!

Also individuals. My domain registrations date back to when .com was businesses-only and .org was the only TLD an individual could register a domain in (.us wasn’t open for public registrations at the time). Sure I could register other domains, but that doesn’t change the fact that I’ve got literally hundreds of accounts that’re tied to email addresses in my .org domain and changing all of them on short notice would be a nightmare.

This comment has been deemed insightful by the community.
Anonymous Coward says:

Re: Re: Re: Good lord, this is bad news!

Wikipedia says no restrictions were ever enforced for .net. Anyway, for an American, it’s not likely to couse financial hardship unless you have a shitload of domains.

The sale of PIR should still be blocked, and the corruption investigated. Notice how nobody’s claimed that costs of operating a TLD have increased.

This comment has been deemed insightful by the community.
michael says:

Re: Good lord, this is bad news!

Wikimedia and Gutenberg are massive non-profits who can relatively easily eat this small cost.

But I’m on the board of a very small non-profit, and while an extra $50/yr. isn’t terrible, it still makes things that much more difficult.

And at this point there’s nothing keeping our domain costs from rising another 10-fold next year except the word of obviously corrupt liars.

Anonymous Coward says:

Re: Re: Good lord, this is bad news!

I’m not a massive corporation or even a small non-profit. I am one person alone. I hold multiple .org registrations because they point to different sites with different content… all of which I’m hosting with money out of my own pockets. Any sudden increase in costs will be felt, but cancelling the registrations isn’t an option as they will be snapped up in milliseconds by cybersquatters and spammed.

Anonymous Coward says:

Re: Re: Good lord, help!

This California religious society, opening as a sorority for Asian students with no legal place to live in 1935, did not take in $60 in tithings yet this year.
Please send $help for our .org that we have held since 1998.

P.S. Network Solutions’ e-mail (which we pay over $100 a year for) is now ”cloud” based and just hopeless useless crashing crap, after twenty fine years.

Scary Devil Monastery (profile) says:

Re: Good lord, this is bad news!

"What will this mean for the non-profit world? Will this mean that nonprofits such as Wikimedia and Gutenberg are going to be more expensive to maintain?"

It means alternatives to ICANN such as OpenNIC become more relevant, i suppose.

There has been murmuring for years that ICANN has found itself subject of a sort of regulatory capture, beginning to operate with profit motives and political bias.

I’m VERY disappointed with Vint Cerf who should really know better. This sort of shit will only encourage a split to form in the network root. And I don’t think the current form of www is robust enough to survive becoming the equivalent of a forking Linux distro.

Anonymous Coward says:

Re: Good lord, this is bad news!

It is horrible.

It means that the cost will increase for the various non-profit organizations I provide hosting and support in a small rural community. (They only pay the cost for their domain, I manage it for them and provide free web design, hosting and email.)

We are talking about small churches, food pantries, youth groups and community support groups. Some have had an established presence with a .org domain for decades. It’s how they organize and communicate.

These people have a hard enough time making ends meet without some schmuck jacking up their (domain) rent.

This comment has been deemed insightful by the community.
Anonymous Anonymous Coward (profile) says:

Shame, shame, shame.

I wonder how their original charter was worded that allows this kind of behavior. The non-profits that I have been involved with would not allow such a transaction, at least without destroying the tax advantages we enjoyed (501c3) (under US tax laws, but were they chartered under US tax laws?).

In any event, they have spoiled the notion that these public service organization existed to serve the public. I also wonder how easy/difficult it would be to take the responsibilities they claim away from them? So far as I know, there is no law, anywhere, that actually gives them the power to control the Internet, and there are a lot more of us than there are of them.

Coyne Tibbets (profile) says:

The first mistake

I was going to write a snide comment about how ICANN was soooooo much better now in 2019 than it was in 2016 when DOC was in control. When TechDirt was pushing privatization as a panacea for replacing government control.

But, hey, first of all it would get me banned, and second of all no one learns from their mistakes. C’est la vie.

This comment has been deemed insightful by the community.
Scary Devil Monastery (profile) says:

Re: The first mistake

Privatization of an NPO only works if you can ensure to keep it an NPO. If you can’t, government control is better.

And government control only works if the citizenry can be arsed to keep their politicians from practicing regulatory capture on the "impartial" organization. If THAT doesn’t work, privatization is better.

So which path is better really boils down to which path is CURRENTLY the least bad option. And in that it has to be said that when republicans are in charge, government control is ALWAYS the worst option.
When democrats are in charge you may at least end up with a crook whose chosen venue of crime isn’t necessarily primarily aimed at the citizenry.

This comment has been deemed insightful by the community.
Thad (profile) says:

Re: The first mistake

I was going to write a snide comment about how ICANN was soooooo much better now in 2019 than it was in 2016 when DOC was in control. When TechDirt was pushing privatization as a panacea for replacing government control.

…and you just did.

first of all it would get me banned

Yes, Techdirt is notorious for banning people who make snide comments that are critical of its positions. I’m sure you’re going to be banned for this comment. Any minute now.

Anonymous Coward says:

Same old price

The price cap in the old .org agreement allowed a 10% price increase every year, see sec 7.3(a). The new buyer says it will increase the price by no more than 10% per year, the exact same amount that the astroturfy campaign agaisnt removing the price cap demanded.
If that was OK six months ago, why is it a problem now?

nasch (profile) says:

Re: Same old price

If that was OK six months ago, why is it a problem now?

Because the buyer "says" that is what they will do. But if there is nothing stopping them from increasing it more other than their word, then there’s probably nothing stopping them. If there was actually no desire to increase the price faster, the cap wouldn’t have been removed.

Richard Bennett (profile) says:

ISOC gets the net neutrality treatment

It’s funny to see the net neutrality people giving ISOC the treatment formerly reserved for ISPs thought to be secretly violating unwritten rules. These people only have one gear: total freakout.

Selling off PIR is actually a good move for ISOC and for the Internet. It’s conflict of interest for the sponsor of the Internet standards process to be involved in the domain registry business, and this deal ends it.

The Internet’s design is too dependent on bureaucratic administration of names and numbers, and now that ISOC is insulated from dependence on this poor design it can perhaps be more constructive in moving past it.

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