ICANN Blocks Deal to Sell .Org Registry to Private Investment Firm
A private investment firm has been blocked from buying the .org registry over worries the company will try to squeeze nonprofit groups for cash to keep their website domains.
The private investment firm, Ethos Capital, has been trying to buy the .org registry from the Internet Society for $1.1 billion. But on Thursday, ICANN, the organization that manages web addresses, rejected the sale.
“The entire Board stands by this decision,” ICANN said. “After thorough due diligence and robust discussion, we concluded that this is the right decision to take.”
The .org top-level domain registry is especially important because it controls over 10.5 million domain names on the web. Since 2003, the .org registry has operated as a nonprofit operation under the Internet Society, resulting in prices for .org domains that cost around $10 a year.
But last year, Ethos Capital, a newly founded investment firm, kicked off an effort to buy the .org registry from the Internet Society with the goal of turning the .org registry into a for-profit endeavor.
The Internet Society said the sale would put the organization on a “solid financial footing” to help it fund new operations. Meanwhile, Ethos Capital promised to keep prices low by entering into a legally binding commitment. The investment firm also vowed to create an independent stewardship council to govern its policies over the .org registry.
However, the commitments weren’t enough to sway critics. Numerous nonprofit groups, as well as US lawmakers, have opposed the deal, saying it gives Ethos Capital too much power over millions of .org domains. “There is no reason to believe that Ethos Capital will act in their best interest,” wrote a group of US senators, including Elizabeth Warren, back in January. “In fact, the opposite is true; the sale will create a situation in which [Ethos] will have incentives to raise fees, worsen service, monetize data, and potentially censor these nonprofits.”
Earlier this month, California Attorney General Xavier Becerra also sent a letter to ICANN warning he could take action to stop the sale. “This office will continue to evaluate this matter, and will take whatever action necessary to protect Californians and the nonprofit community,” he wrote.
On Thursday, ICANN agreed with the concerns. The .org registry has been responsibly operated as a nonprofit operation for the past 20 years, it said. Ethos, on the other hand, is bound to serve its corporate stakeholders.
ICANN also pointed to how Ethos will take on $360 million in debt to buy the .org registry, “which raises further question about how the .org registrants will be protected or will benefit from this conversion.”
However, Ethos claims ICANN is overstepping its regulatory role in denying the sale. “Today’s action opens the door for ICANN to unilaterally reject future transfer requests based on agenda-driven pressure by outside parties,” the company said in a statement, which adds: “This decision will suffocate innovation and deter future investment in the domain industry.”
Ethos say it’s currently evaluating its options on pursuing the deal.
