the internet society
A regulatory body that oversees the address book of the internet has put the kibosh (at least for now) on a private equity firm's efforts to purchase control of all dot-org domains for more than $1 billion.
The Internet Corporation for Assigned Names and Numbers (ICANN) said late Thursday that its board had voted to reject the proposed change in ownership, which would have impacted 10.5 million registered domain names, including Farm Aid, The Sierra Club, Amnesty International, Girl Scouts of the USA, The Associated Press and ProPublica.
"ICANN entrusted to PIR (Public Interest Registry) the responsibility to serve the public interest in its operation of the .ORG registry, and now ICANN is being asked to transfer that trust to a new entity without a public interest mandate," ICANN said. Their conclusion was "the public interest is better served in withholding consent."
It's the final chapter in a complex, technical discussion that's taken place over the last few months about the future of a critical segment of the internet, which has included letters from lawmakers, petitions and a subpoena for information and review by California Attorney General Xavier Becerra's office. The decision by ICANN was praised by digital rights advocates.
In November, Boston-based Ethos Capital publicly announced the deal to acquire the nonprofit Public Interest Registry (PIR), which manages the dot-org domain, setting off public debate over the appropriateness of such a deal.
The purchase would have given The Internet Society, a nonprofit that controls and created PIR, a $1.135-billion endowment to continue its other good works it engages in to strengthen the internet, without having to rely solely on fees from dot-org registry users.
In its rationale for the decision, the board stated that its decision to not bless the deal is "both reasonable and in the public interest" and that the board had determined 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 (generic top level domain aka dot-org) registry."
The board said that if it had consented to the deal being made, it would have to trust that the new proposed for-profit entity, which would lack embedded nonprofit protections and now have fiduciary obligations to its new investors to repay $360 million in debt, would serve the same benefits to the dot-org community.
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 worried would 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.
Ethos called the decision by ICANN a "dangerous precedent with broad industry implications" in a statement released late Thursday and said it was evaluating its options.
Ethos has tried to address concerns about it being a private equity firm by releasing initiatives to assuage concerns, including a stewardship council, measures to limit prices, safeguard against censorship and protect personal data. But none appeared to assuage concerns about the overall structure of the deal.
"ICANN has overstepped its purview enabling it to unilaterally reject future transfer requests based on agenda-driven pressure by outside parties," Ethos said. "This decision will suffocate innovation and deter future investment in the domain industry."
Their statement was also sent out with statements from PIR and ISOC. PIR called the decision "disappointing" and a failure by ICANN to follow its bylaws, processes and contracts. ISOC also echoed that disappointment and questioned ICANN's actions as inconsistent and not in line with what the regulatory body was meant to be.
But the Electronic Frontier Foundation, a nonprofit that advocates digital rights, hailed ICANN's decision as a "stunning victory." Its staff has pushed for months against the deal, organizing letter-writing campaigns and protesting outside ICANN's Playa Vista, Calif. offices.
U.S. Democratic senators Ron Wyden of Oregon, Elizabeth Warren of Massachusetts, Edward J. Markey, of Massachusetts, and Anna Eshoo of California, who earlier wrote a letter to ICANN's board urging them to block the potential sale, praised their decision in a statement released on Friday.
"ICANN made the right decision," Wyden said, adding that the deal would have put the dot-org registry in an "unstable position during this current economic crisis, solely to enrich a private equity firm at the expense of users and nonprofits. The .org registry is too important to be at the mercy of wealthy investors."
Warren called the decision "good news for nonprofits and everyone who relies on a free and open internet" while Eshoo called it a "big win for the internet."
California's AG had previously waded into the issue, writing a letter to ICANN's board, informing them that in his authority to speak for California's public interest in the dot-org registry as the home to noncommercial entities that the public interest would be better served by ICANN withholding its approval of a change in control. ICANN said it considered the AG's letter as one reason to withhold its approval.
Because PIR is incorporated in Pennsylvania, the state's AG also has a role in oversight and approving the proposed conversion of PIR from not-for-profit to for-profit entity. ICANN's board said the lack of approval by Pennsylvania, which won't complete its process before May 4, remains an area of concern and also influenced the decision to withhold consent.
The ICANN board left open the possibility of approving such a deal in the future if PIR is able to provide additional information that resolves concerns raised by the board.
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A private equity firm that's trying to purchase control of all dot-org domains for more than $1 billion said Friday that it is planning to put in place legally-binding measures to address concerns and ongoing criticisms about the deal by lawmakers, nonprofits and activists.
The latest announcement is the most recent turn of events in a complex, technical but important discussion over the future of a critical segment of the internet. In November, Boston-based Ethos Capital publicly announced the deal to acquire the nonprofit Public Interest Registry (PIR), which manages the dot-org domain, setting off public debate over the appropriateness of such a deal. The purchase would give The Internet Society, a nonprofit that controls and created PIR, a $1.135-billion endowment to continue its other good works it engages in to strengthen the internet, without having to rely solely on fees from dot-org registry users.
Earlier this month, California Attorney General Xavier Becerra stepped into the fray. His office said it wanted to review such a deal's potential impact 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 more than 10 million domain names registered worldwide including to well known organizations, nonprofits and media like Farm Aid, The Sierra Club, Amnesty International, Girl Scouts of the USA, The Associated Press and ProPublica.
The Internet Corporation for Assigned Names and Numbers (ICANN), which oversees what's essentially the address book of the internet from its Playa Vista, California offices, still needs to bless the deal. Ethos said Friday that PIR has agreed to push the deal back to March 20 to give ample time to review the additional terms.
Among the new initiatives announced jointly by Ethos, PIR and The Internet Society in a press release Friday are "legally-binding measures to enforce price limits, safeguard against censorship and protect personal data" by amending PIR's registry agreement with ICANN, which allows PIR to operate the dot-org domain. Such changes could not be unilaterally changed by PIR and would apply to dot-org regardless of who operates it, Ethos said.
"We have been listening closely to stakeholder feedback — both positive and negative — and have been working diligently to address these specific issues head on," said Erik Brooks, founder and CEO of Ethos Capital. He said the private equity firm was trying to address requests for measures that were strongly enforceable to ensure Ethos is accountable.
Per Ethos, the legally-binding provisions in the amendment include the following:
- Ensuring dot-org domains do not increase more than 10% annually on average for eight years under a formula that prevents "front-loading" of those increases. Right now it costs roughly $10 for an annual dot-org domain renewal fee.
- Establishment of a "stewardship council" to provide independent advice plus a binding right to veto modifications proposed by PIR to its policies regarding censorship, freedom of expression and use of user data.
- Creation of a $10-million "community enablement fund," contributed by PIR over the life of the current registry agreement, to support initiatives to benefit dot-org registrations that would be approved by the Stewardship Council
- PIR will publish an annual report on its own compliance with the above commitments and account for how it pursued activities to benefit dot-org registrants that year.
A review by dot.LA of the stewardship council's charter makes it clear that it serves as an independent body for advice and that its duties are to be requested and assigned by the PIR board, rather than proactively reviewed by the council.
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 have worried 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.
ICANN's President and CEO Göran Marby said that the nonprofit is in the process of analyzing information it has received and has no comment. The AG's office did not immediately respond to requests for comment. Representatives for the Electronic Frontier Foundation, a nonprofit defending digital privacy, did not immediately comment.
Ethos, PIR and The Internet Society will have representatives available to discuss and provide additional details on Feb. 27.
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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