Should .Org Domains Be Privately Owned? California May Answer the $1B Question

California Attorney General Xavier Becerra has stepped into the fight over whether a private equity firm should be allowed to purchase control of the registry for all dot-org internet domains in a deal that's worth more than $1 billion.


The Internet Corporation for Assigned Names and Numbers, which oversees what's essentially the address book of the internet from its Playa Vista, California offices, announced Friday that it was notified by Becerra's office last week that the AG wants to analyze the impact of the sale to the nonprofit community. Though you don't need to be a nonprofit to own a dot-org domain, the registry is the online home to many such organizations and media, including well known names like Farm Aid, The Sierra Club, Amnesty International, Girl Scouts of the USA, The Associated Press, ProPublica.

There are multiple dueling narratives on the issue, but the essential facts include the following:

  • In November 2019, Ethos Capital announced the deal to acquire the nonprofit Public Interest Registry (PIR), which manages the dot-org domain. The company's officials, including founder and CEO Erik Brooks, say that the firm is devoted to not just making money but also doing public good and helping grow the dot-org registry.
  • ICANN still needs to bless the deal and originally had until mid-February to do so. Though as a result of the review, the deadline for a decision has been pushed back to April 20, said ICANN spokesman Brad White, who declined other comment at this time.
  • More than 21,000 people, 660 organizations and six members of Congress have written letters to say they oppose the deal, which internet governance experts worry will lead to unsavory efforts to make back the more than $1 billion to please investors at the expense of nonprofits doing good or monetize the data's registry at the expense of the public.
  • The Internet Society, a nonprofit that controls and created PIR, has said the deal with Ethos would give it the $1.135-billion endowment necessary to continue other good works it does for the internet and to grow its efforts into the future, without depending solely on the fees PIR gains from dot-org registry users.
  • Ethos has made multiple written statements on a website it put up jointly with PIR and The Internet Society, that it will not raise prices of the dot-org registry more than 10% annually on the dot-org registry, even if it technically can under current rules that were lifted in the months preceding the deal's announcement. Right now it costs roughly $10 for an annual dot-org domain renewal fee.

Internet groups like the nonprofit Electronic Frontier Foundation, a digital rights group, have derided Ethos Capital for not detailing its financial backers or more about those involved in its firm. Its staff attorneys say that none of the promises made by the company are binding.

The Internet Society "is selling out the interests of dot-org users," said Mitch Stoltz, EFF senior staff attorney, noting that the nonprofit was given $5 million in 2002 to be a good steward for dot-org and run it in the public interest.

"Now they're treating it like a building they can sell for cash, and they're not giving sufficient thought to what happens to the people who depend on it."

ICANN's headquarters in Playa Vista. upload.wikimedia.org

In a recent interview, Ethos Capital's Chief Purpose Officer, Nora Abusitta-Ouri, said the deal is a very long-term investment by the company and that it intends to do what it can to assure dot-org registry owners. She said that Ethos plans to put assurances in its binding documents, too.

"We're putting our price commitment in our founding documents, we're applying for B Corp. certification, we're setting up a stewardship council that will have a mandate to fulfill the promises we've made around pricing," said Abusitta-Ouri, adding that it will remain around its historic price range. "If I own a dot-org today and this transaction closes, nothing is going to change for me."

ICANN was previously tied to the U.S. government, but went nonprofit independent and the U.S. ceded control in 2016. But because the world of internet governance is so small, many of the individuals who have connections to the deal or would potentially benefit from it going through are also in that same world.

Stoltz of the EFF said the controversy, which has involved protesters outside ICANN's offices last week, "raises a big question about who ICANN is accountable to, if anyone, because it really looks like they are allowing a handful of industry insiders to make buckets of money by monetizing a piece of the internet's governance that had historically been run for the public benefit."

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University of California, Los Angeles economists say the glass is half full for the U.S. economy — at least for now.

The quarterly UCLA Anderson Forecast released Wednesday wanly touted a "better-than-expected outcome" for the U.S. economy in the near term, a major upgrade from the last report's forecast of a "depression-like" crisis for the economy. But the new, relatively optimistic assessment is highly reliant on how the pandemic progresses, the authors cautioned.

California's economy is broadly expected to mimic the nation's so long as pandemic-related shutdowns dissipate in 2021. Still, the optimistic outlook doesn't expect a full recovery for California until after the end of 2022, when economists forecast state unemployment will remain close to 6%, compared to just under 5% for the U.S. overall.

Part of the reason for this improved forecast is that the economy opened up earlier than anticipated and there were no new shutdowns, despite multiple states experiencing a surge in cases over the summer. Moreover, consumers and businesses adapted quickly to new technologies and remote working, while the Federal Reserve committed to near 0% interest rates until labor market conditions recover. In fact, borrowing rates are at historic lows, below even the levels reached during the Great Recession.

The economic bounce-back was always expected to be big, as temporarily laid-off workers returned to work. Because the economy reopened earlier than USC analysts predicted, recovery numbers, which had been expected in 2021, came instead in the third quarter, leading to "stronger 2020 growth and weaker 2021 growth," the report said.

GDP is expected to grow 0.3% in the fourth quarter with real GDP declining overall to 4.2% for all of 2020, the authors wrote in an essay entitled "The recovery is losing momentum." For context, that's 50% steeper than the decline of 2.8% from the Great Recession in 2008. But those numbers are far better than the annual 8.6% decline forecast in mid-June. The forecast for 2021 is 3.5% growth and 4% growth for 2022.

"That there's more economic activity than we expected that's good news, but it's not something that you'd say we're out of the woods, because we're not," Jerry Nickelsburg, the director of the forecast, told dot.LA. "The economic outlook depends critically on the trajectory of the pandemic and the public health response to it."

Nickelsberg forecasts that it will take the U.S. until the first quarter of 2022 to achieve the same level of economic activity that it saw in the fourth quarter of 2019.

He expects 2020 fourth quarter growth to be relatively weak, with more bankruptcies and layoffs. And winter will put a damper on economic activity in many parts of the country where it has been moved outdoors, Nickelsberg said.

Unemployment isn't expected to reach pre-pandemic rates until late 2024 at the earliest.

And that's with some rather optimistic assumptions, including that there is widespread availability and usage of an effective vaccine in early 2021 or that the pandemic has a relatively mild impact on economic activity in 2021 and 2022. The report also assumes another, more limited federal fiscal stimulus round before the end of 2020.

"None of these assumptions are assured, and if they do not come to pass, our forecast, presented here, is too optimistic," the authors wrote.

Though employment recovery has been fast as workers returned from temporary layoffs, sectors that rely on more human contact have seen a rise in permanent layoffs. In those sectors, employment "won't fully recover until consumers and businesses return to old habits, which won't be for some time, if ever," the forecast said.

But it's on theme that the forecast is a little more uncertain, as Nickelsberg said, "there's a higher probability that we are too optimistic than that we are too pessimistic."

California's leisure and hospitality industry have been hurt by the drop off in international tourism. But home sales have bounced back after a precipitous first-quarter drop.

"There is heightened uncertainty now, uncertainty about the pandemic, uncertainty about fiscal policy, another stimulus package or not out of Washington, uncertainty about the election, there's lots of uncertainty in the economy right now," said Nickelseberg.

A Dive into L.A.'s Tech and Gig Economy

The forecast noted that the gig economy in California has been hit harder by the pandemic in terms of overall unemployment.

L.A. County has more than one million gig workers as of 2018 — roughly one gig job for every four traditional jobs — and the numbers are growing faster in this segment than the U.S. overall.

That helps explain why L.A. has seen steeper drops in overall employment during the "pandemic-induced recession," the report states, especially since a greater share of its gig workers are in transportation, arts, entertainment and recreation, which have been hit especially hard.

Many have been buoyed by the unemployment benefits provided by the coronavirus stimulus bill.

That's especially relevant because gig workers tend to make less than their conventional counterparts. Gig workers in the professional, scientific and technical sector in L.A. earn an average of $52,000 annually, compared to their counterparts who earn $142,000.

The forecast examined tech industry jobs, with five large clusters led by the Bay Area and followed by Southern California, then Boston, Seattle, and Manhattan. The report noted that tech jobs increased dramatically in most of those areas from 2005 to 2020, while in Los Angeles there was only a moderate increase of 36,000 tech jobs.

Although L.A. County ranked second out of 20 counties for having the most tech jobs in the U.S., it was 11th on that same list for average pay. Tech workers in L.A. earned an average salary of $142,000, slightly above the national average of $135,000 for the industry. In Santa Clara, tech workers received an average salary of $287,000, while in Manhattan that number is $205,000 and in Seattle $200,000.

Though the tech industry has done well amid the pandemic, the forecast noted that it could be harder to see a near-future increase in tech workers in the Bay Area and New York, with high costs of living, as companies experiment with remote working.

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Gaming is eating the world.

So says a new report issued Tuesday by L.A.-based investment firm MaC Venture Capital.

The report mentions the recent explosion of gaming companies – including Epic Games' $1.78 billion raise that valued it at $17.3 billion, Unity's $1.3 billion IPO that valued the Epic competitor at $13.7 billion and Roblox's $150 million fundraise that valued the kid's gaming "sandbox" at $4 billion — and that was before the pandemic boosted Roblox's user base.

But most of the analysis is devoted to the techniques and tools that gaming has popularized over the years, and that are fast proliferating into areas as diverse as retail, film production, medicine and national defense.

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Disney is laying off 28,000 workers at its U.S. theme parks after the pandemic devastated Walt Disney World and kept Anaheim's Disneyland Resort shuttered for six months.

Disney Parks Chairman Josh D'Amaro said Tuesday that 67% of those being laid off from both Disney World and Disneyland are part-time employees.

"As difficult as this decision is today, we believe that the steps we are taking will enable us to emerge a more effective and efficient operation when we return to normal," said D'Amaro in a statement.

Disney World was able to open with a limited capacity in July, but Disneyland has been closed since March. D'Amaro took a jab at Gov. Gavin Newsom suggesting that his hand was forced by California's "unwillingness" to allow for the park to open.

On Tuesday, 19 state legislators pleaded with Newsom following calls from Anaheim's mayor to reopen the Disneyland and theme parks throughout California. They argued that parks can reopen safely but they are left in the dark as to which steps need to be followed for reopening.

The announcing statement also added that they are speaking to unions in order to know what steps are next for union-represented cast members.

Disney's third quarter earnings showed an 85% drop in revenues to $2 billion from the company's parks, experiences and products division compared to the same period last year.

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