The .org controversy
In November 2019, the Internet Society (ISOC) announced its intention to sell Public Interest Registry (PIR) – the registry for the .org top-level domain – to investment firm Ethos Capital for US$1.135 billion. The announcement has generated controversy, with supporters and opponents of the deal strongly voicing their views.
The Internet Society noted its disappointment with ICANN having ‘acted as a regulatory body it was never meant to be’ and stated that ‘neither PIR nor any of its operations are for sale now’.
Ethos found ICANN’s decision as ‘dangerous precedent with broad industry implications’, noting that the company is ‘evaluating its options’.
Members of the Save .ORG campaign expressed their support for ICANN’s decision and called on ICANN to ‘open a public process for bids to find a new home for the .org domain’.
Setting the scene
In 2002, ICANN issued a request for proposals for the reassignment of .org. The selection criteria required that the .org registry was responsive to the needs, concerns, and views of the community using .org domains for noncommercial purposes. This special attention to noncommercial Internet users attracted many civil society entities to host their domains under .org.
ISOC, through its nonprofit subsidiary PIR, won the bid, among other reasons, because of its commitment to non-commercial interests. Yearly surpluses from .org operations have been allocated to ISOC and used to support the organisation’s Internet-related activities.
Originally, the registry agreement (RA) between ICANN and PIR included a restriction which prevented PIR from increasing the prices for .org domains by more than 10% per year. This restriction was lifted when a new RA was concluded in June 2020, although ICANN had received many public comments against the change.
In September 2019, ISOC received an unsolicited bid from Ethos for the sale of .org. The organisation’s Board of Trustee saw the offer as ‘compelling enough to take it seriously’ and to finally approve it unanimously.
Details of the deal
On 14 November 2019, one day after the public announcement regarding the deal with Ethos, PIR submitted a formal notification to ICANN of the proposed sale. The notification was submitted in line with the .org registry agreement, which obliges PIR to obtain ICANN’s formal approval before completing any transaction that would result in a change of control of the registry. At that time, PIR refused ICANN’s request to allow it to publish the notification.
In early December 2019, ICANN requested additional information from PIR regarding the transaction. The answers provided by the registry were published by ICANN in a redacted version in January 2020. Then, on 23 December, four members of the US Congress raised questions over potential harms that the sale of .org could have on nonprofit groups, free speech, and Internet users. ISOC, PIR, and Ethos responded in early January 2020.
The answers provided to ICANN and the members of the US Congress offered additional information on the proposed .org sale:
- PIR is to become a for-profit entity, but Ethos has committed to ‘anchoring PIR in a Public Benefit LLC structure prior to completing the transaction’.
- The buyer of .org is an acquisition company called Purpose Domains Direct (created in October 2019), which in turn is owned by Purpose Domains Holdings (created at the same time); both are controlled by Ethos. Among the five directors only Jon Nevett, current CEO of PIR, has been named.
- ISOC has created a charity, the Connected Giving Foundation, which will take ownership of PIR immediately before the sale and then manage the funds generated by the transaction.
- Ethos will finance the deal in part through a loan which PIR will subsequently have to pay back.
- Ethos proposes to establish a Stewardship Council for PIR, ‘an independent and transparent body’ to provide policy guidance to PIR and oversee a new Community Enablement Fund to support initiatives serving .org users.
In February 2020, PIR and Ethos announced a series of Public Interest Commitments (PICs) that would be added to the .org registry agreement if the sale is concluded. Modified in March and April 2020, these PICs nuance some of the previous commitments made by Ethos, such as: (a).org domain name fees will not increase by more than 10% per year on average for eight years; (b) the .org Stewardship Council will be empowered to provide advice on and have a binding right to veto modifications proposed to PIR's policies regarding censorship and freedom and expression and the use of .org registrant data; (c) the Stewardship Council will be selected through an open process; (d) a Community Enablement Fund will be established to provide support for initiatives benefiting .org registrants; (e) PIR will publish annual reports that assess the registry's compliance with the commitments; (f) the annual transparency report will also include the number of .org domain name registrations that have been suspended or terminated under the registry's anti-abuse policy or pursuant to a court order.
The main arguments
Once the .org sale became public, concerns emerged within the Internet community over both the potential negative implications of .org being sold to a for-profit entity and over the perceived lack of transparency regarding the deal. ICANN itself received letters from several organisations – such as the Internet Commerce Association, the Mozilla Foundation, and members of the US Congress– asking it to protect the interests of the .org community and even reject the takeover of .org registry by Ethos. And several initiatives emerged, such as the Save .ORG campaign and the Cooperative Corporation for .ORG Registrants (CCOR) project which wants ICANN to pass the .org registry to them instead of approving the sale to Ethos.
One main concern is that a commercially-driven PIR would be less motivated to act in the public interest. But ISOC and its supporters argued that .org was operated by for-profit companies before PIR, without any impact on the public interest at large. Moreover, a for-profit PIR would be able to reinvest in itself and stay up-to-date with the changing marketplace. Ethos also reiterated its commitment to actions such as the creation of the Stewardship Council for PIR and the Community Enablement Fund, but these commitments are seen as insufficient and unclear by many in the community, concerned that there would be no mechanisms to hold Ethos accountable.
.org prices considerations are also among the key concerns. With the price caps for .org domains lifted in June 2019 and PIR becoming a for-profit entity, there are concerns that the registry could unreasonably raise the prices. Ethos indicated that it intends to keep the .org prices reasonable and ‘limit any potential increase [...] to no more than 10% per year on average’. But questions remain on whether and how such commitments could be enforced. Moreover, as some of the .org sale will be financed through a loan that will have to be repaid by PIR, this could be invoked by the registry later on to increase the prices. Some even claim that there is no coincidence that the sale of .org was announced soon after the price caps removal, although ISOC has stated that it only received the Ethos offer in September 2019 (about two months after the new RA was concluded with ICANN).
Questions were also raised on how PIR would handle rights protection measures as well as requests for information from governments. Ethos and PIR noted that they are committed to preserving freedom of speech and that the Stewardship Council ‘will be empowered to ratify strong rules protecting freedom of expression and safeguarding against censorship’.
But what seems to have bothered the community most is the lack of assurance that a new registry will continue to observe the conditions enshrined in ICANN's 2002 reassignment of .org (special consideration to the needs of non-commercial registrants) and a perceived lack of transparency around the deal. Moreover, the community was not involved in a discussion around the sale. Since transparency, inclusiveness, and accountability are the main pillars underpinning the multistakeholder model of ICANN and ISOC, critics warn that such a closed deal about one of the most important public domains may destroy their credibility, and affect trust in the multistakeholder process.