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Now .org critics actually want to take over the registry, blocking billion-dollar sale

Kevin Murphy, January 8, 2020, 13:23:00 (UTC), Domain Registries

A group of ICANN alumni and non-profits want to block the $1.135 billion sale of .org manager Public Interest Registry and for ICANN to hand over the reins to a new not-for-profit entity.

The Cooperative Corporation of .ORG Registrants was reportedly formed in California this week, supported by a long list of opponents of the .org deal, which would see the Internet Society sell PIR to a new private equity company called Ethos Capital.

Currently not-for-profit .org would become commercial again, answerable to shareholders who want to see a return on their investment. PIR recently had its 10%-a-year price caps lifted by ICANN, enabling it to increase its annual registry fees by as much as it wants.

Founding directors of the new co-op reportedly include ICANN founding chair Esther Dyson and founding CEO Mike Roberts, neither of whom have been heavily involved in ICANN or the domain name industry for the better part of two decades.

According to Reuters, Also on the board are Wikimedia Foundation CEO Katherine Maher, Jeff Ubois of the MacArthur Foundation, and Bill Woodcock, executive director of Packet Clearing House, which provides .org, via back-end Afilias, with DNS resolution services.

Dyson told the New York Times: “If you’re owned by private equity, your incentive is to make a profit. Our incentive is to serve and protect nonprofits and the public.”

The new registry would not have a profit motive, and excess funds would be returned to the non-profit community.

While the new group has yet to make a formal, public proposal, the idea is reportedly to persuade ICANN to block the sale of PIR to Ethos — something nobody can seem to agree is even within its powers — and instead transfer stewardship to this new co-op.

It’s a crazily ambitious goal.

The group would be basically asking ICANN to cut off ISOC’s primary funding source. PIR currently gives tens of millions of dollars a year to its owner, and after the Ethos deal ISOC intends to live off the interest of its billion-dollar windfall.

If ICANN canceled the PIR contract and handed .org to a third party, ISOC would get nothing, potentially crippling it and subsidiaries such as the IETF.

I can’t imagine such a decision, on the outside chance ICANN actually went down this path, not resulting in litigation.

The Cooperative Corporation of .ORG Registrants is reportedly also being backed by other supporters of the #SaveDotOrg campaign (which now has over 20,000 supporters), including the free speech advocates at the Electronic Frontier Foundation and NTEN, a conference/community hub for non-profits.

This campaign last month managed to persuade a group of four Democrat members of Congress — Ron Wyden, Richard Blumenthal, Elizabeth Warren and Anna Eshoo — to express their concerns about the Ethos deal and ask ISOC/Ethos/PIR a series of pointed questions about its potential ramifications.

In its response this week (pdf), the leaders of the three entities avoided directly answering the bulleted questions, but did make some commitments that I believe are new.

Notably, they said that the registry would reincorporate as a Public Benefit LLC before the acquisition closes. This is a relatively new form of legal entity, which has been described like this:

A Public Benefit LLC is a for-profit entity; however, in operating a Public Benefit LLC, the LLC’s management can take into account social, economic and political considerations without violating its fiduciary duty to act in the best interests of the company.

In other words, PIR would be free to place the needs of .org’s non-profit registrants ahead of the needs of its own shareholders without opening itself up to legal action.

A “statement of public benefit” would be in its certificate of formation, and would include a commitment “to limit any potential increase in the price of a .ORG domain registration to no more than 10% per year on average”.

I’ve noted before that this is worded vaguely enough to give Ethos some flexibility to raise prices by over 10%, but the fact that it’s offering to bake a commitment on pricing into its corporate DNA may be seen as a step in the right direction by critics.

It’s also proposing a “Stewardship Council”, which would be “an independent and transparent body” tasked with providing policy guidance to PIR and overseeing a new “Community Investment Fund” that would be used for initiatives such as the annual .org awards program.

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Comments (7)

  1. JZ says:

    Well, since the Ethos thing is clearly an insider deal it won’t happen. Too bad. Greed wins. What a surprise.

  2. Rubens Kuhl says:

    They could put the money where they mouth is, and buy PIR from ISOC instead of Ethos.

    • Kevin Murphy says:

      Do you think these people have a billion dollars?

      • Rob says:

        I think they could raise the Billion dollars in debt with their eyes closed.

        There have an incredibly secure asset that kicks off roughly 10% interest easily each year. And if they needed more, they could just increase the price of the domain per year and voila ! It would be a no brainer to do that deal with them.

        Hell, if Jeff Bezos is smart, and god knows he is, he could be the hero here and loan it to them. Didn’t he also just beat ICANN for a different domain too ? hmmm.

  3. John says:

    Well, with the exposure to millions of readers in “the failing New York Times,” thoughtful individuals around the world everyone have become aware that the U.S. government, having put the Internet in the hands of the deeply-committed founding community of technologists back when, has allowed a governance structure that has delivered it over to creatures of the “capitalist-based internet industrial complex.”

    Revolution is just another way of saying that what goes comes around comes around. You can’t make an omelette without breaking a few eggs. What a treat to have front row seats!

  4. John says:

    Well, with the exposure to millions of readers in “the failing New York Times,” thoughtful individuals around the world everywhere have become aware that the U.S. government, having put the Internet in the hands of the deeply-committed founding community of technologists back when, has allowed a governance structure that has delivered it over to creatures of the “capitalist-based internet industrial complex.”

    Revolution is just another way of saying that what goes around comes around. We can’t make omelettes without breaking some eggs. What a treat to have front row seats!

Leave a Reply to John