Latest news of the domain name industry

Recent Posts

ICANN dissenter explains why she wanted .org sale approved

ICANN has finally published the dissenting statement made by one of its directors following the vote to deny Ethos Capital the right to acquire Public Interest Registry from the Internet Society.

Avri Doria was one of only two directors to vote against the majority on the April 30 resolution, and the only one to file a written statement for the record, which ICANN has now published (pdf). It reads:

Briefly, I believe that the contractual conditions have been met by PIR and Ethos and that they have gone beyond these required contractual conditions to offer significant public interest commitments currently missing from the current contract.

On balance after intense study of the proposal I have come to conclusion that the Public Interest of registrants and users is better served by the PICs offered by PIR, though they could
be stronger, than by forcing PIR to remain within ISOC without any guarantees on public interest related to data usage and freedom of expression.

In exchange for ICANN approval of the deal, Ethos had promised to cap its price increases at 10% for eight years and to create a largely independent stewardship council to monitor issues related to privacy and free speech in .org.

With ICANN voting to deny the acquisition, PIR is not required to live up to those commitments, but opponents of the deal feel that its not-for-profit status under ISOC control provide stronger protections against bad behavior.

ICANN said it rejected the deal on “public interest” grounds for a variety of reasons including the lack of transparency into Ethos’ ultimate ownership, distrust that Ethos would be able to service its debt, doubt over its management in the long term, and the sheer volume of dissent from the community.

Also playing a strong role was an objection from the California attorney general, who pulled rank and informed ICANN that it should reject the deal, reminding the organization that it was subject to his oversight. This has been described as a dangerous precedent.

ICANN’s .org decision was NOT unanimous, and it was made in secret

When ICANN announced its decision to deny Public Interest Registry’s request to be acquired by Ethos Capital at the end of April, I felt a little foolish.

I’d confidently predicted just days earlier that the decision by the board would not be unanimous, but ICANN, in announcing the decision, said “the entire Board stands by this decision”.

But it turns out I was right after all. Three directors voted against the consensus and one abstained.

The dissenting votes were cast by industry policy consultant Avri Doria, Serbian internet pioneer Danko Jevtović, and former Sudanese ccTLD operator Ihab Osman.

Doria and Jevtović voted against the first resolved clause, which rejected PIR’s request. All three voted against the second resolved clause, which would have allowed PIR to file a second request.

Sarah Deutsch, a private practice lawyer, abstained from both votes, presumably because she also sits on the board of the Electronic Frontier Foundation, the civil liberties group that can, via California’s attorney general, probably be credited most with getting the transaction killed.

All three dissenters and Deutsch are Nominating Committee appointees.

According to the preliminary report of the April 30 meeting, “Doria indicated that she would be voting against the resolution and explained her views about how the public interest would be better served by ICANN granting its consent to PIR’s request.”

What her reasons were are not reflected in the record.

It also seems likely that any substantive minuting of ICANN’s decision is likely to be limited, as it appears to have been made at a different, off-the-books session at an unspecified earlier date.

The preliminary report notes the “the Board discussed and considered alternative draft resolutions for potential Board action as part of an earlier briefing”.

No such earlier meeting is listed on ICANN’s web site. The board’s previous formal meeting, two weeks earlier, had PIR’s request removed from the agenda at the last minute.

So it appears that ICANN’s board decided to reject the deal basically in secret at some point between April 17 and April 29, during a meeting of which ICANN has no obligation to publicly release the minutes.

Nice transparency loophole!

There’s always the Documentary Information Disclosure Policy, I suppose.

.org sale officially dead

Public Interest Registry has formally announced that its proposed $1.13 billion acquisition by Ethos Capital is dead.

The company told ICANN yesterday that it is withdrawing its request for a change of control under its .org contract and that it “will not be pursuing an ICANN Request for Reconsideration or taking any other action to try to revive the Transaction”.

In a statement, CEO Jon Nevett said that PIR is no longer for sale to any other party. It will remain under the Internet Society’s control.

He also pointed out that it’s not within ICANN’s power to arbitrarily transfer .org to another registry, as some critics have called for.

“Such a transfer by ICANN is a contractual impossibility under our registry agreement,” he wrote.

ICANN rejected the change of control request after deciding it was not in the public interest for .org to pass into for-profit hands.

Following the decision, ISOC had indicated that PIR was no longer for sale.

The .org deal may be dead and buried, but calls remain for PIR to lose its contract

The Internet Society has revealed that the .org registry operator PIR is no longer for sale.

The news came in a statement from ISOC chair Andrew Sullivan late Friday, less than 24 hours after ICANN withheld its consent for the proposed $1.13 billion acquisition by private equity firm Ethos Capital.

ICANN had held the door open for Ethos and ISOC to resubmit a change of control request, and Ethos had said Thursday that it was evaluating its options, but it appears the decision has been made to keep PIR under ISOC’s wing.

In his statement, Sullivan expressed his dismay that ICANN had acted as a “regulator” by evaluating the deal using a public interest test rather than simply rubber-stamping it as it has in all other cases of registry acquisitions. He wrote:

It should concern the Internet community that ICANN has shown itself to be much more susceptible to political pressure than its limited mandate would recommend.

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.

But who would want to, or could afford to, buy it? While ICANN has made it clear that PE firms are welcome to acquire other TLDs, it wants .org to remain in non-profit hands.

During the last few months of controversy, one other embryonic effort to take over .org was announced, led by founding ICANN chair Esther Dyson.

Called the Cooperative Corporation of dot-org Registrants (CCOR), it had no intention of handing over a billion dollars for .org, it simply wanted ICANN to assign the contract to its control.

It still wants that, or something like that. In a statement Saturday, CCOR said it “calls upon ICANN to proceed with the established multi-stakeholder led open request for proposals for stewardship of the dot-org domain”.

Unless it can be shown that PIR has seriously broken the terms of its Registry Agreement, the chances of ICANN randomly opening up .org to tender is pretty much zero.

CCOR goes on to say that it is still worried about .org falling into private hands and that it will lobby for legally binding policies “including the preservation of privacy, diversity and human rights, and freedom from censorship”.

Decision on .org deal may come sooner than you think

Kevin Murphy, April 28, 2020, Domain Registries

If you’re against the acquisition of .org and are thinking about an objection or spot of lobbying at the eleventh hour, be aware: this is the eleventh hour.

The deal, which would see Ethos Capital buy Public Interest Registry from the Internet Society for over a billion dollars, is on the agenda for a meeting of the ICANN board of directors this Thursday.

ICANN and Ethos have agreed to a May 4 deadline for a decision, but is whispered that the board plans to give the deal the nod, or not, at the Thursday meeting.

Given how long it usually takes for ICANN to post the results of its board meetings, typically a few days, there’s a decent chance that PIR, Ethos and ISOC could be given formal approval before any opponents have time to react to the resolution.

I think it could go either way.

The one thing I have a fairly high degree of confidence in is that I do not expect a unanimous vote.

While I think ICANN’s institutional instincts are to approve, the breadth and depth of the outrage over the deal may be difficult for some directors to ignore.

If it were only domain investors objecting, approval would be a slam dunk. But here we also have non-profits, civil liberties groups and governments crying foul.

Perhaps most importantly, there’s the objection of the California attorney generalobjection of the California attorney general to consider.

He has power over ICANN because it’s a non-profit registered in his state, and he’s said “will take whatever action necessary to protect Californians and the nonprofit community”.

His last letter to ICANN is believed to have caused the board to remove the .org deal from the agenda at its last meeting and seek a deadline extension from PIR.

One plausible interpretation of that chain of events is that the board was ready to give Ethos the nod, but the AG’s letter gave it pause.

Ethos clarifies .org price rises, promises to reveal number of censored domains

Public Interest Registry and would-be owner Ethos Capital have slightly revised the set of promises they hope to keep if ICANN approves the $1.13 billion acquisition.

Notably, in updating their proposed Public Interest Commitments (pdf), they’ve set out in plain dollar terms for the first time the maximum annual price PIR would charge for a .org domain over the coming seven years.

Applicable Maximum FeeTime Period
$9.93June 30, 2019 to June 29, 2020
$10.92June 30, 2020 to June 29, 2021
$12.02June 30, 2021 to June 29, 2022
$13.22June 30, 2022 to June 29, 2023
$14.54June 30, 2023 to June 29, 2024
$15.99June 30, 2024 to June 29, 2025
$17.59June 30, 2025 to June 29, 2026
$19.35June 30, 2026 to June 29, 2027

Previous versions of the PICs just included a formula and invited the reader to do the math(s).

The two companies are proposing to scrap price caps altogether after June 2027.

If ICANN rejects the deal, under its current contract PIR would be free to raise its prices willy-nilly from day one, though some believe it would be less likely to do so under its current ownership by the non-profit Internet Society.

The new PICs also include a nod to those who believe that PIR would become less sensitive to issues like free speech and censorship — perhaps because China may lean on Ethos’ shadowy billionaire backers. The document now states:

Registry Operator will produce and publish annually a report… This report will also include a transparency report setting forth the number of .ORG domain name registrations that have been suspended or terminated by Registry Operator during the preceding year under Registry Operator’s Anti-Abuse Policy or pursuant to court order.

A few other tweaks clarify the launch date and composition of its proposed Stewardship Council, a body made up of expert outsiders that would offer policy guidance and have a veto on issues such as changes to .org censorship and privacy policy.

The PICs now ban family members of people working for PIR from sitting on the council, and clarify that it would have to be up and running six months after the acquisition closes.

Because .org is not a gTLD applied for in 2012, the PICs do not appear to be open for public comment, but post-acquisition changes to the document would be.

ICANN currently plans to approve or deny the acquisition request by April 20, just 11 days from now.

End of the road for Neustar as GoDaddy U-turns again and buys out its registry biz

GoDaddy has changed its mind about the registry side of the industry yet again, and has acquired the business of Neustar, one of the largest and oldest registries.

The deal will see GoDaddy purchase, for an undisclosed sum, all of Neustar’s registry assets, amounting to 215 TLDs and about 12 million domains.

It means the gTLD .biz is now under the new GoDaddy Registry umbrella, as are the contracts to run the ccTLDs .us, .in, and .co, 130 dot-brand gTLDs and 70 open gTLDs.

Neustar’s registry staff are also being taken on.

“We’re bringing the whole team aboard. One of the things we’re very excited about is bringing the team aboard,” Andrew Low Ah Kee, GoDaddy’s chief operating officer, told DI today.

He added that, due to coronavirus job insecurities wracking many minds right now, GoDaddy has promised its entire workforce that there will be no layoffs in the second quarter.

Nicolai Bezsonoff, currently senior VP of Neustar’s registry business, will run the new unit. He said for him the opportunity for “innovation” was at the heart of the deal.

“We’ve always been one step removed from the customer, so it can be hard to understand what customer wants to do,” he said. “This gives us huge customer insight into what customers want and how they want to use domains.”

Pressed for hypothetical examples of innovation, Bezsonoff floated ideas about selling domains for partial-year periods, or doing more to crack down on DNS abuse.

The deal is an example of “vertical integration”, which has been controversial due to the potential risk of a dominant registry playing favorites with its in-house registrar, or vice versa.

While registries such as Donuts, CentralNic and until recently Uniregistry vertically integrated with little complaint, the industry is currently nervous about Verisign’s newfound ability under its ICANN contract to own and run a registrar.

Because GoDaddy is the Verisign — the runaway market leader — of the registrar side of the industry, one might expect this deal (expected to close this quarter) to get more scrutiny than most.

But the company says it’s going to “strictly adhere to a governance model that maintains independence between the GoDaddy registry and registrar businesses”.

Low Ah Kee said that this means the registry and registrar “won’t share any information that gives or appears to given any unfair advantage” to the GoDaddy registrar, that their business performance will be assessed separately, and that they’ll be audited to make sure they’re not breaking this separation.

If GoDaddy appears to be preemptively expecting criticism, there’s a good reason why: the proposed acquisition of .org manager PIR by private equity group Ethos Capital has caused huge upset in recent months, and there are some parallels here.

First, like .org, pricing restrictions were lifted in Neustar’s .biz under a contract renewal with ICANN last year. It fell under the radar a little as .biz is substantially smaller, not a legacy gTLD as such, and not widely used.

Like the .org deal, the transfer of control of .biz will also be subject to ICANN’s approval before GoDaddy and Neustar can seal the deal.

Could we be looking at another big public fight over a gTLD acquisition?

But unlike Ethos with .org, GoDaddy says it has no intention of raising prices with .biz.

“We will not be raising prices, in fact we will look into reducing prices for some TLDs,” Bezsonoff said.

One TLD where one assumes prices won’t be going down is .co, where Neustar has just had its margins massively slashed by the Colombian government.

The acquisition was announced just days after the Colombian government announced that it has renewed its contract with Neustar to run .co for another five years, but under financial terms hugely more favorable to itself.

Whereas the initial 10-year term saw the government being paid 6% to 7% of the .co take, that number has soared to 81%, making .co — arguably Neustar’s registry crown jewel — a substantially less-attractive TLD to manage.

One assumes that the acquisition price would have fluctuated wildly based on the outcome of the .co renegotiation, but the GoDaddy/Neustar execs I talked to today didn’t want to talk about terms.

GoDaddy’s history with the registry side of the business has been changeable.

As far as ICANN contract is concerned, it is already a registry because it owns the .godaddy dot-brand. But that’s currently unused, with the registry functions outsourced to — cough — Neustar’s arch-rival Afilias.

Given Neustar’s religious devotion to the dot-brand concept, and the weirdness of using one of your primary competitors for a key function, one might expect both of those situations to change.

GoDaddy did also apply for .casa and .home back in 2012, but changed its mind and abandoned both bids fairly early in the process.

The sudden excitement about the registry business today begs the question of why GoDaddy didn’t buy Uniregistry’s registry business at the same time as it bought its secondary market and registrar earlier this year, but apparently it was not for sale.

Following the acquisition, Neustar is keeping its DNS resolution services and GoDaddy will continue to use them, so Neustar is not entirely out of the domain game, but it looks like the end of the road for Neustar as a brand I regularly report on.

The registry started life in 2000 as “NeuLevel”, a joint-venture between Neustar and Aussie registrar Melbourne IT formed to apply to ICANN for new gTLDs. It wanted .web, but got .biz, which now has about 1.7 million names under management, down from a 2014 peak of 2.7 million.

US senators tell ICANN to reject .org deal

Kevin Murphy, March 20, 2020, Domain Registries

Five US senators have called on ICANN to not approve the acquisition of Public Interest Registry by Ethos Capital.

The senators — all Democrats — said in a March 18 letter published today that the proposed $1.13 billion deal is “against the public interest”.

The surprisingly detailed nine-page letter (pdf) was signed by Ron Wyden, Richard Blumenthal, Elizabeth Warren and Anna Eshoo, following up from a similar letter sent in January. The new letter also has Ed Markey as a signatory. They write:

We were concerned that the sale would be contrary to ICANN’s commitment to the public benefit, that it might undermine the reliability of .ORG websites, and that Ethos is unlikely to be a responsible steward of the .ORG registry. New information we have obtained in the last two months, including statements made by ISOC, PIR, and Ethos, has validated these concerns. Accordingly, we write to reiterate our view that ICANN should block the proposed change of control of the .ORG registry.

Chief among their concerns is the lack of transparency about who is actually bankrolling the deal. Ethos has confirmed it will be partially funded by loans, but the identities of its actual owners have not been confirmed.

It’s been said that two of the backers are investment firms linked to high-profile Republicans — Senator Mitt Romney and the late Ross Perot.

The senators are also worried that the business plan Ethos has publicly laid out may not be realistic, suggesting that PIR will be forced to rip off customers in order to recoup the cost of the acquisition.

They go on to say that Ethos’ promise to only increase prices by 10% per year, enforceable via a Public Interest Commitment in its ICANN contract, is “weak”, particularly given that the commitment would automatically expire seven years from now.

They’re also not buying the notion that PIR’s proposed Stewardship Council, made up of outside .org stakeholders, would have enough power to guide registry policy, calling the council “toothless”.

ICANN is of course under no obligation to take its lead from a handful of legislators, but it’s yet another voice stacked against a deal that already had very little support.

ICANN has until April 20 to make a decision about the change of control.

.org decision delayed another month

Kevin Murphy, March 18, 2020, Domain Registries

ICANN has been given another month to decided whether or not to approve Ethos Capital’s proposed $1.13 billion acquisition of Public Interest Registry from the Internet Society.

PIR said today that it has agreed to give ICANN until April 20 to give it the yay or nay on the controversial deal.

It seems the disruption and distraction caused by the coronavirus pandemic played at least a small role in the decision. PIR said:

To ensure ICANN and the California Attorney General’s office, with which we have been communicating, have the time they need to address any outstanding questions regarding the transaction, especially in light of current events, we have agreed to an ICANN deadline extension to April 20th. We look forward to ICANN’s decision by this date.

Yesterday, opponents of the deal suggested that the acquisition could interfere with the global pandemic response, but PIR has dismissed these claims today as “misleading and alarmist” and “deceiving the public”.

Meanwhile, PIR has updated the proposed contractual Public Interest Commitments that it believes will address some of its critics’ concerns.

Future changes to the PICs will be subject to ICANN’s public comment process, the company said. This is presumably designed to calm fears that the registry will simply dump the PICs next time its contract comes up for renegotiation.

Given the level of confidence in the efficacy of the public comment process — which I would argue is currently close to zero — I doubt this new promise will have its intended effect.

PIR has also taken on criticism that its proposed .ORG Stewardship Council, designed to make sure .org continues to be managed in the public interest, could easily be captured by Ethos yes-men.

Now, instead of appointing the first five members of the council itself, Ethos will instead recruit an “internationally-recognized executive search firm” to find five suitable candidates from stakeholder groups including ICANN’s Non-Commercial Stakeholder Group and At-Large Advisory Committee.

Those nominations will still be subject to final approval by the PIR board, however, so again I think the deal’s critics will still have complaints to cling to.

PIR expects to announce further details of the council selection process next Monday, March 23.

Delay .org deal because of… coronavirus? Gimme a break

Kevin Murphy, March 18, 2020, Domain Policy

Opponents of Public Interest Registry’s proposed acquisition by Ethos Capital are now claiming that ICANN should delay approval of the deal due to coronavirus.

A statement, released yesterday by digital rights group Access Now with the apparent approval of several other like-minded groups, outlines a few reasons why coronavirus means ICANN should reject, or at least delay its consideration of, the deal.

ICANN is currently working towards a March 20 deadline to deliver its verdict.

Peter Micek, general counsel for Access Now, said in the statement:

Far from routine, this transfer would further imperil crucial channels of trusted information in a precarious time. From Médecins Sans Frontières to Wikipedia to many of the world’s hospitals, organizations that disseminate accurate health information and connect affected communities with public resources depend on the .ORG domain. Now is not the time to shift the ground beneath their online activities.

Could a $0.97 increase in the cost of wikipedia.org this year see Wikipedia’s hive mind crumble and turn into the digital equivalent of Jenny McCarthy’s brain? Will it prompt MSF volunteers to retreat, screaming, from the front lines? I don’t think so.

The statement goes on to suggest that China would be able to use its substantial financial and political clout to lean on Ethos’ secretive backers to something something something coronavirus. Kenneth Roth, executive director of Human Rights Watch said:

The Chinese government routinely uses economic pressure to censor critics or inconvenient information, such as about its disastrous early cover-up of the coronavirus outbreak. Investors in the private equity firm that wants to buy the .ORG domain inevitably will have economic interests that Beijing could threaten.

While there may well be a nugget of truth in there, I fail to see how it applies to the current pandemic. Is the argument that China will pressure Ethos’ billionaire money men to close down domains belonging to organizations disseminating accurate Covid-19 information? It seems a stretch.

China already has substantial powers to shut down domains within its own borders, and requires registries operating in the country to comply with Draconian censorship rules. I’m not aware of any cases of these existing powers being exercised against domains globally.

A third argument is that ICANN is using coronavirus as a convenient smokescreen to quietly approve the acquisition while everyone else is busy ram-raiding corner stores for toilet paper.

Daniel Eriksson, head of technology at Transparency International, said in the statement:

If this transfer goes ahead during the current crisis as planned, we’ll look back on it as an example of vested interests taking advantage of the extraordinary situation created by the COVID-19 pandemic to further their own concerns at the expense of the broader good of society. We need to be vigilant against any such actions, and this is precisely the role of many civil society organizations that have a watchdog function. We need maximum transparency and integrity around the sale of .ORG, and that is simply not possible if the sale is rushed through at a moment when peoples’ attention is elsewhere.

Again, this seems like a stretch. The announcement of the acquisition predates the discovery of Covid-19 by weeks, and it has been subject to intense scrutiny, engagement, comment and unprecedented — albeit imperfect — levels of transparency ever since. This is an acquisition being negotiated to a large extent in the public square.

I’ll be generous and suggest a fourth explanation: this is probably just a poor-taste (but, let’s face it, successful) attempt to grab headlines by linking the #SaveDotOrg campaign, however thinly, to the pandemic currently occupying the world’s collective conscious.

There are plenty of good arguments that could be — and are being — made in favor of further delay and scrutiny of the deal, but I don’t think coronavirus is one of them.