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California .org probe — existential crisis or blessed relief for ICANN?

Kevin Murphy, February 5, 2020, 22:04:56 (UTC), Domain Policy

Does the California attorney general’s probe into ICANN’s relationship with the .org registry represent an existential crisis for ICANN, or could it be better seen as a great opportunity to palm off responsibility to a higher power?
It was recently revealed that AG Xavier Becerra is looking into ICANN’s actions related to not only the proposed acquisition of Public Interest Registry by Ethos Capital, but also the removal of price caps from the .org registry contract.
The AG’s office says it wants to “to analyze the impact to the nonprofit community, including to ICANN, of this proposed transfer”.
Because ICANN is a California-based non-profit, the AG says he has the power to levy penalties or revoke ICANN’s corporate registration.
Becerra’s office sent ICANN a list of 35 searching questions (pdf) related to both deals on January 23, demanding a response by February 7.
While many of the questions demand documentation already in the public domain, published on ICANN’s web site, Becerra also wants to get his hands on redacted portions of PIR’s communications with ICANN, as well as all emails between ICANN, Ethos, PIR and the Internet Society, which currently owns PIR.
At the very least, the investigation complicates ICANN’s own probe of the acquisition. ICANN has to approve transfers of control of gTLD registries, and it’s currently poring over documentation provided by PIR detailing the structure of the deal.
It’s already delayed approval once, saying last month (pdf) that it expected to give a yay or nay to PIR by February 17.
Following the AG’s letter, ICANN asked PIR (pdf) to extend that deadline to April 20, to allow it time to deal with the new concerns.
It emerged yesterday that PIR has told ICANN to get (partially) stuffed (pdf), allowing an extension only to February 29, saying further delay “is neither necessary nor warranted at this time”.
But PIR did give its reluctant consent to ICANN disclosing previously confidential information to the AG, despite taking issue with ICANN’s opinion that AG letters are arguably equivalent to subpoenas, so it was under a legal obligation to do so.
It’s not entirely clear what could come of this predicament.
PIR says that while ICANN is able to approve or decline changes of control, it has no authority under the .org Registry Agreement to deny PIR changing its legal status from non-profit to for-profit entity.
And while California no doubt has jurisdiction over ICANN, PIR is based in Pennsylvania, so it would be up to Becerra’s counterpart in that state (a fellow Democrat, as it happens) to attempt to obstruct PIR’s planned conversion.
If that were to happen, it would interfere with Ethos’ somewhat convoluted acquisition plan.
Some of the AG’s 35 questions are pretty basic, stuff like “describe in detail the authority ICANN has to regulate, license, and/or oversee the domain name system” and “provide an explanation of ICANN’s authority to regulate the registration fees charged for .org domains”.
That’s either coming from a place of ignorance, or from somebody who’s deliberately questioning ICANN’s very existence as the central coordinating body of the DNS.
That would be frightening indeed.
But at the same time, this intervention from a governmental body may come as a relief to ICANN.
ICANN doesn’t like making difficult decisions when it comes to the big legal questions, or indeed anything with the potential to be controversial and ergo litigation bait.
Take, for example, its ongoing pleas to European data protection authorities to fix its GDPR problem, or its longstanding deferment to US competition authorities when it comes to issues such as the price of a .com domain and the introduction of new registry services, or its outsourcing to expert third parties of almost every potential wedge issue to be found the new gTLD program.
An opinion on .org one way or the other from the California AG could provide a lovely smokescreen for ICANN to approve or reject the .org deal without actually taking responsibility for the decision, a prospect I suspect would we well-received by the Org.
Whether it will actually receive this blessing is an open question.

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