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ICANN vetoes controversial sale of .org registry

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ICANN, the body that oversees the internet domain name system, has put a stop to the sale of the .org registry to a secretive private equity company following months of outcry over the proposal.

The top-level .org domain is used by overwhelmingly by non-profit organisations. Organisations with .org domains include Wikipedia, Khan Academy, arXiv, NPR, Change.org, the Pirate Bay, the IET, and some 10 million others. It is managed by the non-profit Public Interest Registry.

In November 2019, it emerged that the Public Interest Registry was to be sold by the Internet Society to Ethos Capital for $1.1bn and would abandon its non-profit status. Ethos Capital is a private equity firm founded in 2019 about which virtually nothing was known; the company’s website lists just two employees and four investments. It has declined to fully disclose its investors and directors.

It quickly emerged that the firm had been created by a former interim CEO of the Internet Corporation for Assigned Names and Numbers (ICANN) one day after it was revealed that ICANN would lift caps on .org domains, making the registry worth tens of millions of dollars more. Ethos Capital has an unusual structure of six shell companies, all registered on the same day, and soon before it offered to buy the Public Interest Registry.

All these factors – combined with Ethos Capital’s lack of transparency – sparked questions, concern, and anger from financial experts, non-profits, advocacy groups like the Electronic Frontier Foundation, and even ICANN’s first chair, Esther Dyson. A group of US lawmakers, including Senators Elizabeth Warren, Richard Blumenthal, and Ron Wyden, also sent a letter demanding answers about the sale and calling for assurances that the domain will remain accessible and neutral.

In particular, non-profits are concerned that Ethos Capital could raise fees, censor domains, or otherwise act against their interests. Since November, the sale has been delayed time and time again.

In late February, Ethos Capital attempted to assuage concerns about its purchase of the Public Interest Registry, promising not to increase the price of .org domains by more than 10 per cent a year for eight years. In mid-April, the sale was delayed a final time following an intervention from the California Attorney General, Xavier Becerra, who warned that the sale places profit above public interest and raises many “serious concerns”, such as undermining the accessibility and affordability of the .org domain.

“Little is known about Ethos Capital and its multiple proposed subsidiaries. Even less is known about how these for-profit corporate entities and private investors will operate their businesses,” Becerra wrote. “Given the lack of transparency regarding Ethos’ future plans, approval of the transfer may place at risk the operational stability of the .org registry.”

Becerra said that his office would “take whatever action necessary to protect Californians and the non-profit community.” The AG has several powers which could put ICANN – which is registered as a non-profit in California – and Ethos Capital in an challenging position if the sale went ahead, such as the power to subpoena internal communications.

ICANN has blocked the sale, stating that it would create “unacceptable uncertainty” for the non-profits which use the .org domain. ICANN has been under growing pressure to exert its authority to block the sale.

ICANN listed several factors in its decision which echoed the arguments which have been made by non-profits, activists, and Becerra: the transformation of the Public Interest Registry into a for-profit organisation; Ethos Capital’s lack of experience maintaining a registry; Ethos Capital’s lack of transparency regarding its investors; lac of engagement with the .org community in the design of the proposed sale; and questions about how non-profits will be protected given the $360m in debt that the Public Interest Registry would be left to pay off under the planned sale.

“The pubic interest is better served in withholding consent as a result of various factors that create unacceptable uncertainty over the future of the third largest [generic top-level domain] registry,” ICANN stated.

Despite ICANN’s veto of the proposed sale, this is not necessarily the end of this attempted purchase of the Public Interest Registry; ICANN has said that if additional information can be provided to assuage its concerns, another proposal may be submitted.

The Electronic Frontier Foundation praised ICANN’s intervention as a “major victory for the millions of non-profits, civil society organisations, and individuals who make .org their home online.”

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