Digital Rights Organizations Cheer After ICANN Blocks Sale of .org

Non-profit organizations are breathing a sigh of relief. ICANN announced that it is blocking the sale of .org. Organizations are cheering the decision.

It’s been a hard fought battle with so much at stake. Last year, a plan was publicly revealed that the Internet Society (ISOC) would sell the .org Top Level Domain (TLD) to Ethos Capital for $1.135 billion. The announced sale sparked public outcry for a number of reasons. This includes the fact that the owners of the TLD would go from being a non-profit entity to a for profit corporation. It also sparked fears of censorship and a rising cost for claiming a .org domain.

Ethos Capital, for its part, said that nothing would change once the change in ownership occurs. They also said that they would create a transparent committee to handle requests to revoke ownership of different .org domains. Non-profits didn’t believe Ethos Capital and argued that the committee is simply a symbolic move to portray transparency. Ultimately, the decision rested with ICANN (Internet Corporation for Assigned Names and Numbers) who would ultimately make the final decision of whether or not the sale can go ahead.

ICANNs decision was previously set for April 20th. However, after significant pushback, ICANN ultimately delayed its decision to May 4th. This occurred after what some are calling a “scathing” letter from the California Attorney General who blasted the move and questioned whether or not the move would benefit the Internet community. As some have already pointed out, this letter is significant given how ICANN operates in California in the first place.

While the date was set to May 4th, it seems that ICANN decided not to wait that long. In a public announcement, ICANN announced that it has rejected the proposed sale:

Today, the ICANN Board made the decision to reject the proposed change of control and entity conversion request that Public Interest Registry (PIR) submitted to ICANN.

After completing extensive due diligence, the ICANN Board finds that withholding consent of the transfer of PIR from the Internet Society (ISOC) to Ethos Capital is reasonable, and the right thing to do.

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.

Digital rights organizations are cheering over the decision. From The EFF:

In a stunning victory for nonprofits and NGOs around the world working in the public interest, ICANN today roundly rejected Ethos Capital’s plan to transform the .ORG domain registry into a heavily indebted for-profit entity. This is an important victory that recognizes the registry’s long legacy as a mission-based, non-for-profit entity protecting the interests of thousands of organizations and the people they serve.

We’re glad ICANN listened to the many voices in the nonprofit world urging it not to support the sale of Public Interest Registry, which runs .ORG, to private equity firm Ethos Capital. The proposed buyout was an attempt by domain name industry insiders to profit off of thousands of nonprofits and NGOs around the world. Saying the sale would fundamentally change PIR into an “entity bound to serve the interests of its corporate stakeholders” with “no meaningful plan to protect or serve the .ORG community,” ICANN made clear that it saw the proposal for what it was, regardless of Ethos’ claims that nonprofits would continue to have a say in their future. “ICANN entrusted to PIR the responsibility to serve the public interest in its operation of the .ORG registry,” they wrote, “and now ICANN is being asked to transfer that trust to a new entity without a public interest mandate.”

The sale threatened to bring censorship and increased operating costs to the nonprofit world. As EFF warned, a private equity-owned registry would have a financial incentive to suspend domain names—causing websites to go dark—at the request of powerful corporate interests and governments.

In a blog post about its decision, ICANN also pointed out how the deal risked the registry’s financial stability. They noted that the $1.1 billion proposed sale would change PIR “from a viable not-for-profit entity to a for-profit entity with a US$360 million debt obligation.” The debt was not for the benefit of PIR or the .ORG community, but for the financial interests of Ethos and its investors. And Ethos failed to convince ICANN that it would not drain PIR of its financial resources, putting the stability and security of the .ORG registry at risk.

ICANN was not convinced by the token “stewardship council” that Ethos proposed in an attempt to add an appearance of accountability. Echoing EFF’s own letter, they noted that “the membership of the Stewardship Council is subject to the approval of PIR’s board of directors and, as a result, could become captured by or beholden to the for-profit interests of PIR’s owners and therefore are unlikely to be truly independent of Ethos Capital or PIR’s board.”

Other’s also cheered over the decision, saying that ICANN ultimately came to the right decision. Some of the cynics out there suggested that anyone doing the right thing these days is a general overall surprise as is the case here.

Regardless, it seems that many are breathing a sigh of relief over this decision. Now, hopefully, things can return to normal for those with a .org domain name.

Drew Wilson on Twitter: @icecube85 and Facebook.

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