Internet Domain Watchdog Rejects Sale of Dot-Org to Private Equity Firm

Privacy and free-speech advocates feared a for-profit enterprise would cave to pressure from corporations and authoritarian governments seeking to suppress critical voices.

(CN) — The Internet Corporation for Assigned Names and Numbers (ICANN) rejected the proposed sale of the dot-org domain, a decision hailed as a victory by nonprofits wary of a private equity firm assuming control over online civic space.

ICANN board chairman Maarten Botterman announced the results of its vote in a blog post Thursday evening.

“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,” he said, abbreviating the term generic top-level domain.

The Internet Society said it was disappointed by the vote and stands by its decision to put dot-org up for sale. Ethos Capital characterized ICANN’s vote as an overreach of its power and a capitulation to outside forces.

“This decision will suffocate innovation and deter future investment in the domain industry,” Ethos said in a blog post. “ICANN has empowered itself to extend its authority into areas that fall well outside of its legal mandate in acting as a regulatory body. Today’s decision also creates an uncertain and unpredictable business environment, where the enforceability and value of the ICANN contract itself may be called into question now that the rules of transferring ownership are open to influence by outside interests. Ethos is evaluating its options at this time.”

The ICANN board had until Monday to make a decision whether to reject or accept the sale of the Public Internet Registry, the domain’s current steward, to Ethos Capital, a company that appears to be run by former ICANN executives and advisers with ties to other private equity firms.

The board had until Monday to make a decision whether to reject or accept the sale of the Public Internet Registry, the domain’s current steward, to Ethos Capital, a company that appears to be run by former ICANN executives and advisers with ties to other private equity firms.

The Public Internet Registry is currently part of the Internet Society, a nonprofit whose motto is “The Internet is for Everyone.” It formed the registry to manage the dot-org domain in in 2002. But in November 2019, the Internet Society decided it no longer wanted the responsibility of overseeing the registry and announced the sale to Ethos. 

Cara Gagliano, an attorney with the Electronic Frontier Foundation, said that without the ICANN board’s approval, the $1.1. billion deal is “effectively dead.”

California Attorney General Xavier Becerra also opposed the sale and sent a letter in mid-April to Botterman saying he was concerned that a private company’s ownership would jeopardize the dot-org domain’s stability. As a newly for-profit entity, he noted, the Public Internet Registry would incur tax liabilities and operating costs, and Ethos would be responsible for appeasing investors and ensuring registry has the funds to keep running. 

In a statement, Becerra applauded ICANN’s decision.

“ICANN’s decision restores some confidence that the non-profit community may continue to be driven by a desire to serve the public, not to make a quick buck at charitable donors’ and taxpayers’ expense,” Becerra said.

Nonprofits had concerns that an investment firm’s ownership would leave dot-org open to censorship and economic manipulation from corporations and authoritarian governments like China, which could pressure the Public Internet Registry to suspend domain names and effectively shut down websites in an effort to suppress critical voices.

Mitch Stoltz, a senior attorney with the Electronic Frontier Foundation, praised ICANN’s decision in an email to Courthouse News on Friday.

“ICANN did the right thing by declining the change of control of the dot-org registry. While the Internet Society could still sell its subsidiary, Public Interest Registry, to Ethos Capital, PIR would have no value after such a sale, because PIR’s ability to operate the dot-org domain comes from its contract with ICANN,” he said. “Hopefully, ICANN will now begin a process to find a new steward for the dot-org domain.”

%d bloggers like this: