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ICANN delays approval of .org acquisition

Kevin Murphy, December 10, 2019, 17:56:54 (UTC), Domain Registries

Ethos Capital is going to have to wait a little longer for ICANN to sign off its acquisition of .org operator Public Interest Registry.
ICANN said today that it has asked PIR and the Internet Society, which currently owns the registry, for additional information about the proposed $1.13 billion deal.
This has the effect of delaying ICANN’s approval of the deal by up to 30 days, which could be extended by another 30 days if there’s another round of questioning.
Under PIR’s contract, ICANN gets to approve or reject any requests for transfer of control of gTLD registries. I’m not aware of any that have been rejected in the past, though hundreds have been approved.
ICANN’s CEO and chair jointly penned a blog post today, writing:

We have asked PIR to provide information related to the continuity of the operations of the .ORG registry, the nature of the proposed transaction, how the proposed new ownership structure would continue to adhere to the terms of our current agreement with PIR, and how they intend to act consistently with their promises to serve the .ORG community with more than 10 million domain name registrations.

This is perhaps an uncharacteristically assertive stance from the organization, which has so far not been seen as particularly responsive to the legions of critics that have appeared since the .org contract came up for public comment earlier this year.
The exact questions asked have not been published, and the responses may also remain sealed, due to a convention that such matters are handled privately.
PIR has already rejected ICANN’s request to publish its request for approval of the change of control.
But ICANN general counsel John Jeffrey who wrote to PIR and ISOC (pdf) yesterday to say that it is “critical” and “imperative” that PIR give permission for the correspondence to be published.
Jeffrey sneaked in a ‘gotcha’ by alluding to last week’s NTEN web conference, in which ISOC CEO Andrew Sullivan made noises about improving transparency.
The main concern with the deal is of course the fact that .org will once again become a commercial operation, having for 17 years been a non-profit that funneled hundreds of millions of .org dollars into ISOC’s coffers.
Coupled with PIR’s newfound contractual ability to raise prices indiscriminately, this has not sat well with many of the non-profits that call .org their home.
Promises from PIR and Ethos that price increases will be in line with the historical 10%-a-year cap have been met with some skepticism, and there have been calls for more transparency about Ethos’ plans.

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Comments (8)

  1. John Laprise says:

    I know that the ICANN board and org have been getting an earful from stakeholders. People complain about the machinery but working the machinery is pretty effective…

  2. John says:

    This entire matter was self-inflicted by ICANN. ICANN created this entire mess.
    On June 30th – ICANN migrated .ORG over to an entirely new registry contract. A new contract that was developed specifically and ONLY for the new gTLD program. This contract was never intended to replace the registry contract on Legacy TLD’s with market power.
    ICANN’s justification for doing so was contract uniformity. But ICANN ignored 3,200 public comments – and decided to proceed anyway.
    By moving over to the new version of the registry contract, ICANN specifically:
    — Removed all pricing caps in .org domain extension, despite the fact they have been in place for more than 20 years for consumer protection. This will allow the operator to charge whatever amount they want for domain registration and renewals. If Ethos Capital wants to charge $100 or $1,000 for a domain name registration or renewal – they can absolutely do this under the new terms of the contract.
    — The registry operator is now able to vertically integrate and become (or acquire) a domain name registrar. Previously, vertical integration was not allowed on legacy TLD’s due to competition issues. The Department of Commerce specifically did not allow registries to be a registrar at the same time. The US Government broke up Network Solutions / Verisign in the early 2000’s for this very reason. They did not want companies being both the supplier and retailer – which creates a whole set of new problems with favorable treatment, equal access, uniform pricing, tiered access, etc.
    — Allow the registry operator to hold back domain names upon expiration – and attach premium pricing or other restrictions on subsequent registration terms.
    — Allows the registry to charge different registration and renewal pricing (aka premium renewal pricing.) Thus, the wholesale cost of .org could be $10 in the first year, but $10,000 in subsequent years.
    I’m sure I’m missing other benefits to the registry operator under the new gTLD version of the registry contract? Can anyone add to the list above?
    Again, the new gTLD registry agreement was created and developed for new gTLD’s – which were not even live yet. They had no market power and on customers. It was never intended to replace Legacy TLD’s with market power.
    ICANN’s decision to completely deregulate will cause harm to registrants throughout the world. Consumers will be forced to pay more money to register or maintain an existing .org domain registration. And this was entirely facilitated by ICANN itself.
    Most troubling – ICANN did not do any work. It simply announced that it was deregulating and it wants to get out of price regulation.
    So ICANN’s solution – completely remove all pricing caps and allow the registry operator the charge whatever amount they want.
    ICANN did this without conducting an economic study, without considering market and competition issues, without analyzing PIR’s financials and operating margins and ratios, without looking at PIR’s declining cost to operate the registry, without consulting with industry stakeholders, and without seeking advice from competition authority as it has done in the past. This was an ICANN staff decision and ICANN did not do ANY work or even basic analysis before migrating .org over to the new contact.
    ICANN simply announced it is no longer “regulating” – it wants to be out of the business of price regulation – despite the fact that ICNAN has acted as a price regulator in the past.
    But if ICANN is no longer regulating – who is regulating this vast global resource going forward?

    • John L says:

      Section 2.10(c) of the new .org agreement specifically requires uniform renewal pricing. You don’t have to like the agreement, but please try and not to pretend it says things it doesn’t.

  3. I thought ICANN stated there were not in a position to make a call on the deal. Sounds like that was nonsense.

  4. Mark Thorpe says:

    It’s about damn time ICANN looked into this bad deal!
    “PIR has already rejected ICANN’s request to publish its request for approval of the change of control”. Huge red flag! What are you trying to hide PIR?
    Correspondence between ICANN and PIR should be publicly published as well!

  5. John says:

    How does the multi-stakeholder model function when all of the details are confidential and behind closed doors?
    How can the bottom-up, multi-stakeholder process work when PIR/ISCO and Ethos Capital refuse to answer key questions that have been repeatedly asked?

    • Rubens Kuhl says:

      Policies are guidelines, not actual day to day run of a system. At the end of the day someone has to do the job, and that usually includes confidentiality, like in many companies (even those with high transparency like public-traded ones).

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