ICANN Board Blocks The Sale Of The .Org Registry

Last fall, we wrote about what appeared to be many of the sketchy details between the non-profit Internet Society (ISOC) agreeing to sell off the non-profit Public Interesty Registry (PIR), which runs the .org top level domain registry, to the very much for-profit private equity firm, Ethos Capital, which had recently been formed, and involved a bunch ex-ICANN execs and other internet registry folks. Even if the deal made perfect sense, there was a lot of questionable issues raised concerning who was involved, whether or not there was self-dealing, and how transparent the whole thing was. On the flipside, a number of very smart people I know and respect -- including some who worked for ISOC, insisted that the deal not only made sense, but was good for the future of the .org domain and the wider internet. In January, we had a long podcast with Mike Godwin, who is on the board of ISOC and voted for the deal, debating whether or not the deal made sense.

In the intervening months, many people and organizations had petitioned ICANN to block the deal, and ICANN had repeatedly delayed its vote -- with the last day coming a few weeks ago right after California's Attorney General, Xavier Becerra, sent a pretty scathing letter about the deal.

On Thursday, ICANN's board voted to block the deal, saying that it just created too much uncertainty for non-profit organizations who rely on the .org top level domain.

The Board was presented with a unique and complex situation – impacting one of the largest registries with more than 10.5 million domain names registered. 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. Factors that were considered in determining reasonableness include, but are not limited to:

A change from the fundamental public interest nature of PIR to an entity that is bound to serve the interests of its corporate stakeholders, and which has no meaningful plan to protect or serve the .ORG community.
ICANN is being asked to agree to contract with a wholly different form of entity; instead of maintaining its contract with the mission-based, not-for-profit that has responsibly operated the .ORG registry for nearly 20 years, with the protections for its own community embedded in its mission and status as a not-for-profit entity.
The US$360 million debt instrument forces PIR to service that debt and provide returns to its shareholders, which raises further question about how the .ORG registrants will be protected or will benefit from this conversion. This is a fundamental change in financial position from a not-for-profit entity.
There are additional uncertainties, such as an untested Stewardship Council that might not be properly independent, or why PIR needs to change its corporate form to pursue new business initiatives.
The transaction as proposed relies on ICANN as a backstop for enforcement of disputes between the .ORG community and the registry operator in an untested manner.
The entire Board stands by this decision. After thorough due diligence and robust discussion, we concluded that this is the right decision to take. While recognizing the disappointment for some, we call upon all involved to find a healthy way forward, with a keen eye to provide the best possible support to the .ORG community.
It will be interesting to see what happens next -- but if ISOC wants to sell off PIR, it's apparently going to need to go down a different path. In the meantime, ISOC's CEO sent out an email and a blog post talking about his disappointment, and (once again) explaining why he felt the deal made sense and was done appropriately, and promises to continue to move forward with helping to make a better internet. He also insists that PIR is not for sale, while taking a dig at ICANN in the process:

Now that we know that ICANN believes its remit to be much larger than we believe it is, we can state this clearly: neither PIR nor any of its operations are for sale now, and the Internet Society will resist vigorously any suggestion that they ought to be.

While most of the focus in these discussions has been specific to the impact on PIR and the .org domain, I do separately wonder if this whole mess will hurt ISOC itself in the very good work that it does. I hope not. Even as I came down pretty clearly against this deal, I can at least recognize that the people on the ISOC side at least were honestly trying to do what they believed made the most sense for everyone. However, a very large swath of the civil society, non-profit, and public interest world disagreed -- and I fear that this ends up damaging ISOC's overall credibility going forward. If that is the end result of this, it would be a huge shame.

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