ICANN Board Blocks The Sale Of The .Org Registry

from the try-again dept

Last fall, we wrote about what appeared to be many of the sketchy details between the non-profit Internet Society (ISOC) agreeing to sell off the non-profit Public Interesty Registry (PIR), which runs the .org top level domain registry, to the very much for-profit private equity firm, Ethos Capital, which had recently been formed, and involved a bunch ex-ICANN execs and other internet registry folks. Even if the deal made perfect sense, there was a lot of questionable issues raised concerning who was involved, whether or not there was self-dealing, and how transparent the whole thing was. On the flipside, a number of very smart people I know and respect -- including some who worked for ISOC, insisted that the deal not only made sense, but was good for the future of the .org domain and the wider internet. In January, we had a long podcast with Mike Godwin, who is on the board of ISOC and voted for the deal, debating whether or not the deal made sense.

In the intervening months, many people and organizations had petitioned ICANN to block the deal, and ICANN had repeatedly delayed its vote -- with the last delay coming a few weeks ago right after California's Attorney General, Xavier Becerra, sent a pretty scathing letter about the deal.

On Thursday, ICANN's board voted to block the deal, saying that it just created too much uncertainty for non-profit organizations who rely on the .org top level domain.

The Board was presented with a unique and complex situation – impacting one of the largest registries with more than 10.5 million domain names registered. After completing its evaluation, the ICANN Board finds that the public interest is better served in withholding consent as a result of various factors that create unacceptable uncertainty over the future of the third largest gTLD registry. Factors that were considered in determining reasonableness include, but are not limited to:

  • A change from the fundamental public interest nature of PIR to an entity that is bound to serve the interests of its corporate stakeholders, and which has no meaningful plan to protect or serve the .ORG community.
  • ICANN is being asked to agree to contract with a wholly different form of entity; instead of maintaining its contract with the mission-based, not-for-profit that has responsibly operated the .ORG registry for nearly 20 years, with the protections for its own community embedded in its mission and status as a not-for-profit entity.
  • The US$360 million debt instrument forces PIR to service that debt and provide returns to its shareholders, which raises further question about how the .ORG registrants will be protected or will benefit from this conversion. This is a fundamental change in financial position from a not-for-profit entity.
  • There are additional uncertainties, such as an untested Stewardship Council that might not be properly independent, or why PIR needs to change its corporate form to pursue new business initiatives.
  • The transaction as proposed relies on ICANN as a backstop for enforcement of disputes between the .ORG community and the registry operator in an untested manner.
The entire Board stands by this decision. After thorough due diligence and robust discussion, we concluded that this is the right decision to take. While recognizing the disappointment for some, we call upon all involved to find a healthy way forward, with a keen eye to provide the best possible support to the .ORG community.

It will be interesting to see what happens next -- but if ISOC wants to sell off PIR, it's apparently going to need to go down a different path. In the meantime, ISOC's CEO sent out an email and a blog post talking about his disappointment, and (once again) explaining why he felt the deal made sense and was done appropriately, and promises to continue to move forward with helping to make a better internet. He also insists that PIR is not for sale, while taking a dig at ICANN in the process:

Now that we know that ICANN believes its remit to be much larger than we believe it is, we can state this clearly: neither PIR nor any of its operations are for sale now, and the Internet Society will resist vigorously any suggestion that they ought to be.

While most of the focus in these discussions has been specific to the impact on PIR and the .org domain, I do separately wonder if this whole mess will hurt ISOC itself in the very good work that it does. I hope not. Even as I came down pretty clearly against this deal, I can at least recognize that the people on the ISOC side at least were honestly trying to do what they believed made the most sense for everyone. However, a very large swath of the civil society, non-profit, and public interest world disagreed -- and I fear that this ends up damaging ISOC's overall credibility going forward. If that is the end result of this, it would be a huge shame.

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Filed Under: .org, non-profits, private equity, tlds
Companies: ethos capital, icann, isoc, pir

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  1. icon
    Ehud Gavron (profile), 1 May 2020 @ 9:21pm

    "Free" as in speech, beer, and Internet

    TL;DR - It is absolutely wrong to sell the .ORG registry to a for-profit. Shareholder profits depend on the shareholders; some want immediate one-day day-trader style profits. Some want 90 day "I'll hold it for a quarter and see" profit, and some want to hold it for years and pass it on to their kids, like traditional 'Blue chip stocks'.

    It's been low cost for nonprofits, and should stay that way, and shareholders can go invest in the market. I hear Tesla is a good buy. No pun intended.

    End TL;DR

    IPv4 allocations and ASNs used to be free. Then people started grabbing and hoarding (just like toilet paper in the US during COVID-19). ARIN wasn't created to solve that, but to remove the functional aspects of managing that from InterNIC -- which was run by the US Department of Defense. To justify their creation, ARIN instituted fees. Other regional registries (i.e., RIPE, etc.) also got their chunk of the fat.

    The DNS registry was also free. Then people started registering gobs of domain names prophylactically to either tie up someone else's name or to sell it to them. Bang. Now domain names are not free.

    In the US:
    COM was supposed to be for commercial only.
    ORG was supposed to be for nonprofit only.
    EDU was supposed to be for colleges and universities and the like only.

    However, as the joy of receiving fees increased, the registrars now allowed pretty much anyone to get anything.

    When we prioritize profits over service what we get is the same quality of service we expect from Comcast, Charter, Frontier, Time Warner, and other Telcos. (Karl Bode has an excellent article in today's Techdirt about removing caps that shouldn't have been there in the first place.)

    The .ORG domain and IPv6 networks remain the last two elements of the original "InterNIC" that haven't been monetized to death. While I also respect Mike Godwin immensely, I disagree with his position that this should be sold... and

    As a preemptive argument I would add:
    If the .ORG was to be sold to someone, it should be a true arm's length transaction, for a fair price, with noticed returns over time. This leveraged buyout is ridiculous.

    This doesn't pass the smell test, and ICANN is weak weak weak for taking this long to address it. At least they did so "correctly". (IMO)


    reply to this | link to this | view in thread ]

  2. identicon
    Pixelation, 1 May 2020 @ 10:35pm


    reply to this | link to this | view in thread ]

  3. identicon
    Scote, 1 May 2020 @ 10:47pm

    Uh, no

    "I can at least recognize that the people on the ISOC side at least were honestly trying to do what they believed made the most sense for everyone. "

    If the buyer were to pay cash, maybe I could believe that. But a leveraged buyout, where the organization being "purchased" has to take on the debt instead of the buyer? No way. That's not a purchase, that's a straight up multi-million dollar gift to the new owners, and any such "sale" should be considered a breach of the fiduciary duty of the board of directors.

    Why would the ISOC sell a cash cow like the .org registry? It's a violation of it's public interest bylaws.

    Leveraged buyouts need to be banned.

    reply to this | link to this | view in thread ]

  4. identicon
    Junkyardmagic, 2 May 2020 @ 12:26am


    As a non-profit executive officer this would have concerned me. While I am a social entrepreneur that supports the idea that sometimes profit is necessary, I wouldn't w at to hand over our domain to entrepreneurs who don't believe the corollary.

    reply to this | link to this | view in thread ]

  5. icon
    Bloof (profile), 2 May 2020 @ 3:49am

    I'm honestly surprised. In a post 2010's world, I expected a rubber stamp and some un asked for concessions to the private equity firm to make the deal even sweeter for them.

    Now watch as Trump finds a way to intervene...

    reply to this | link to this | view in thread ]

  6. icon
    DB (profile), 2 May 2020 @ 7:42am

    I'm struggling to see the ISOC viewpoint.
    There were so many aspects of this deal that appeared corrupt that it's difficult to imagine that people at ISOC didn't see the problems immediately.

    reply to this | link to this | view in thread ]

  7. identicon
    Anonymous Coward, 2 May 2020 @ 8:26am

    "[N]either PIR nor any of its operations are for sale now"

    But it was until blocked by ICANN and will be again if they find some way around the block.

    reply to this | link to this | view in thread ]

  8. icon
    Samuel Abram (profile), 2 May 2020 @ 7:10pm


    We dodged a nuclear bullet there…

    reply to this | link to this | view in thread ]

  9. identicon
    Anonymous Coward, 3 May 2020 @ 8:10am

    We didn't dodge no bullet here. ICANN only blocked it until the heat dies down. They'll still sell it to the interested party, when people are least expecting it. Still crap happened because Obama and the Democrats handed over ICANN to the United Nations.

    What next?

    Democrats get back into power and they go right back to business as usual? Selling out American jobs to other countries? That's exactly what they did with all of those free trade agreements, until Trump was elected, and canceled them out and then replaced them with better trade agreements.

    Democrats are all about spreading our tax dollars to other countries instead of fixing problems in their own backyards. It was under Democrats that saw American jobs shipped overseas, FTAs sending our jobs overseas to help other country's economies while raising our taxes. Yeah, Democrats love taxes, despite them trying to convince everyone else that it's Republicans who love taxes.

    reply to this | link to this | view in thread ]

  10. identicon
    Anonymous Coward, 3 May 2020 @ 8:25am


    What is being sold here? Does non profit imply that all assets being sold were donated? Nice scam if you can swing it.

    After the gop loses horribly this fall, will they rejuvenate their infamous balance the budget mantra? They only speak of balanced budgets when they are not in charge because as soon as they are, they forget wtf it means. Also, when huge expenditures (wars) are off balance sheet how is a balanced budget even possible?

    They're blowing smoke and mirrors ip my ass!

    Needless to say - I remain unconvinced, I think you need to up your game.

    reply to this | link to this | view in thread ]

  11. identicon
    Annonymouse, 4 May 2020 @ 6:21am


    Wow. Just wow.

    Is there any point you can actually get right?

    Selling jobs? How about screwing over foreign workers because they are paid less and don't have to worry about liability? The government didn't do that. Your corporate oligarchs dud did that in the interests of shareholders profits

    The so called free trade agreements are anything but since they hobble local governments and oh surprise surprise when us companies are in the wrong the government protects them from sanctions. So its win win for the big corporations again

    Tax dollars never go to foreign interests. They go to American companies going through the motions of helping foreign interests. Hows the recovery in Puerto Rico' going?

    Both parties love taxes and both hate actually wasting it by directly spending it on citizens.

    reply to this | link to this | view in thread ]

  12. identicon
    Anonymous Coward, 4 May 2020 @ 3:38pm

    Re: "Free" as in speech, beer, and Internet

    COM was supposed to be for commercial only.
    ORG was supposed to be for nonprofit only.
    EDU was supposed to be for colleges and universities and the like only.

    That idea always had the obvious problem that some people and groups didn't fit into any of the categories. Most countries didn't have country-code domains in the early days, and not everyone wants a country associated with them (especially those in unstable countries—some of those top-level domains just went away).

    I put my personal domain in .ORG mostly because it was run by a non-profit. Also because they didn't drag their feet on DNSSEC, or abuse their trust and the protocols to push ads, as Verisign did. So it's sad to see it become the most expensive GTLD of the originals.

    reply to this | link to this | view in thread ]

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