.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.

Afilias promotes .vote domains amid US vote-by-mail controversy

Afilias-owned Monolith Registry, which runs .vote and .voto, has launched a site designed to help US citizens figure out how — or if — they’re able to vote by mail during the coronavirus outbreak.

The site, at mailyourballot.vote, comes as controversy rages in the US about whether voters should be forced to show up in person to ballot boxes in the midst of a deadly-virulent pandemic.

Reports suggest that Republicans are generally against mail-in votes, hiding behind bogus fears of voter fraud, because a lower turnout generally favors their candidates.

While I suppose one could argue that by attempting to make the information accessible it’s implicitly picking a side, Afilias doesn’t have a lot to say about the partisan debate. It said in a press release:

In the age of COVID-19, many voters are interested in voting by mail to avoid potential exposure to the virus. Unfortunately, learning HOW to vote by mail is difficult, as every state has different rules and puts this critical information in a different place. For example, 7 states (IN, LA, MI, SC, TX, YN and KY) restrict voting by mail to elderly voters only and 29 states (plus Washington, D.C.) only allow it in federal elections. Recently, governors of two states (NY and KY) ordered absentee ballot applications to be sent to all of their states’ voters.

The new site itself is little more than a directory: a clickable map of the US that bounces you to the official state government policy/instructions on voting by mail.

.vote isn’t an especially populous gTLD, having roughly 3,500 regs at the last count.

The US presidential election is this November.

Despite Brexit, .eu actually returned to growth in Q1

Brexit may have been pounding EURid’s domain base for the last few years, but .eu domains recovered a little in the first quarter due to promotional activity in Portugal.

The UK left the European Union on January 31, and Brits will lose their right to register and hold .eu domains when the so-called transition period ends at the end of the year.

Naturally enough, UK-based registrations of .eu domains continued to decline in Q1, down 24% year over year and 5% on the quarter to end March at 142,600 domains. It’s still the ninth-biggest eligible nation in terms of regs.

But a remarkable 64% spike in regs from Portugal, which EURid attributes to registrar-led promotions, seems to have helped .eu return to a growth state.

There were 80,000 .eu regs from Portugal at the end of the quarter, up by about 30,000 from the end of 2019, more than enough to counteract the 8,000-domain loss from the UK.

Overall, .eu grew from 3,579,689 domains to 3,623,050 domains during the quarter, an increase of about 43,000 or 0.5%.

The number of domains being claimed by EU citizens living outside the EU — possible under a newish policy — more than doubled to 759 domains.

Portugal ccTLD says growth better than expected during pandemic

The Portuguese ccTLD operator has become the latest registry to say that it is still seeing growth despite the coronavirus pandemic.

Associação DNS.PT recently said (via Google Translate) that “the registration in .pt is increasing considerably, we would even say above the expected”.

For the period of January 1 to April 27, .pt added 32,671 new domains, DNS.PT said.

However, that appears to be a considerable drop in regs when compared to the first quarter of 2019 (almost a month shorter period), when it saw 36,930 new registrations. It added 121,359 in the whole of 2019.

The registry said that 359 of these domains — about 1% — appeared to be directly related to the pandemic. About half a dozen have been deleted for violating DNS.PT’s terms of service.

The whole .pt space comprised over 1.2 million domains as of February.

Coronavirus has had a relatively small impact on health in Portugal, compared to other European countries. So far, it’s recorded a little over 1,000 deaths from the disease, from a population of 10.8 million.

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”.

“Dangerous precedent” as ICANN rejects $1.13 billion .org buyout

In a decision that will shock many, ICANN won’t let Ethos Capital buy Public Interest Registry from the Internet Society.

Its board of directors yesterday voted to reject PIR’s request for a change of control of the .org contract, saying that “the public interest is better served in withholding consent”.

Ethos responded angrily almost immediately, saying the decision “sets a dangerous precedent with broad industry implications” and that it is “evaluating its options”.

The ICANN resolution, which was published overnight, is justified by setting out the case that .org is a unique case: a large legacy gTLD with a mandate to serve non-profit entities.

The Board was presented with a unique and complex situation – a request to approve a fundamental change of control over one of the longest-standing and largest registries, that also includes a change in corporate form from a viable not-for-profit entity to a for-profit entity with a US$360 million debt obligation, and with new and untested community engagement mechanisms relying largely upon ICANN contractual compliance enforcement to hold the new entity accountable to the .ORG community. ICANN is being asked to agree to contract with a wholly different form of entity; instead of contracting 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. If ICANN were to consent, ICANN would have to trust that the new proposed for-profit entity that no longer has the embedded protections that come from not-for-profit status, which has fiduciary obligations to its new investors and is obligated to service and repay US$360 million in debt, would serve the same benefits to the .ORG community.

Essentially, ICANN is holding ISOC to the by-and-for non-profits commitment that it made when it inherited the registry from Verisign back in 2002. You may recall I went into some depth on the history of .org back in December.

While noting the broad criticism from various parties — which included domainers and non-profits — about the proposed acquisition, the resolution makes specific reference to the investigation by the office of the California attorney general, which had made vague threats of legal action against ICANN.

Some commentators, including Jonathan Zuck and Michele Neylon — are worried that the AG’s influence now means ICANN has a new boss, and that special interest groups in future need only lobby his office in order to override community-built consensus.

But ICANN did not single out one reason for its decision, saying withholding consent was “reasonable in light of the balancing of all of the circumstances”.

Ethos, while not calling out the AG directly, made the broader claim that ICANN has acted outside its mandate by succumbing to lobbying by outside parties.

Its statement, which I think contains hints at future legal action, reads in full:

Today’s decision by ICANN sets a dangerous precedent with broad industry implications. ICANN has overstepped its purview, which is limited to ensuring routine transfers of indirect control (such as the sale of PIR) do not impact the registry’s security, stability and reliability. Today’s action opens the door for ICANN to unilaterally reject future transfer requests based on agenda-driven pressure by outside parties. It allows ICANN to base its decisions on a subjective interpretation of what it deems to be relevant in these transactions, rather than following its own clear and specified legal directive.

This decision will suffocate innovation and deter future investment in the domain industry. ICANN has empowered itself to extend its authority into areas that fall well outside of its legal mandate in acting as a regulatory body. Today’s decision also creates an uncertain and unpredictable business environment, where the enforceability and value of the ICANN contract itself may be called into question now that the rules of transferring ownership are open to influence by outside interests. Ethos is evaluating its options at this time.

In the same statement, PIR called the decision “a failure to follow its bylaws, processes, and contracts” and ISOC said ICANN “has acted as a regulatory body it was never meant to be”.

While the decision could be chalked up as a win for domain investors and civil libertarians that had challenged the acquisition, it has implications that may not entirely please them.

Assuming the deal stays dead, PIR is no longer promising to only increase prices by 10% a year. It will be able to raise its registry fee arbitrarily, whenever it likes, subject to notice periods and the usual uniform pricing rules.

Domainers will have to hope there’s no sour grapes at ISOC, or they could be looking at big price hikes before long.

And for those interested in censorship, remember PIR is no longer committing to a Stewardship Council that would help protect free speech in .org domains.

The ICANN decision came in spite of a last-minute plea from former chair and ISOC co-founder Vint Cerf, who in a letter (pdf) described the deal as a “wedge issue” that could be leverage to force ICANN into an existential crisis, with outside interests such as the ITU pushing itself as a replacement.

ICANN also received eleventh-hour submissions from the German government (which was against the deal) and German trade group Eco (which was vague but appeared to be for the deal).

Decision on .org deal may come sooner than you think

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.

Verisign expects to sell fewer domains because of coronavirus

Verisign doesn’t expect its domain name base to grow as fast as previously expected this year, due to the coronavirus pandemic.

On Thursday night, it ever so slightly downgraded its guidance for the year, saying it expects domains to grow by between 2% and 3.75%, compared to a previous high-end estimate of 4%.

It’s not a lot, but given how many domains Verisign has under management it still adds up to hundreds of thousands of domains and a few million in lost potential revenue.

CEO Jim Bidzos told analysts that the updated guidance reflected a “more cautious” outlook given the “uncertainty presented by Covid-19”.

It’s encouraging news for anyone wondering how the pandemic will effect the domain industry: the market-leading registry does not expect a big impact.

Verisign’s domain base totaled 160.7 million at the end of the quarter — 147.3 million in .com and 13.4 million in .net — which equates to growth of 3.8% over Q1 2019.

The growth is coming from .com — total .net regs were down by about 400,000 year over year.

The update came during Verisign’s first-quarter earnings call, which once again showed the .com registry printing money. It even managed to report net income higher than revenue, due to some quirks in its historical tax recognition.

For the three months to March 31, the company had net income of $334 million, compared to $163 million a year earlier, on revenue that was up 2% at $313 million.

Even discounting that bottom-line tax-related boost of $168 million, profits were up. Operating income was $206 million, up 3%, and the operating margin was up from 65.4% to 66%.

Even before the perhaps inevitable price increases next year, Verisign’s still managing to grow its margins organically, demonstrating that any prices hikes will be going straight to its bottom line and its shareholders’ pockets.

The company bought back $245 million of stock during the quarter and has another $826 million tucked away for further repurchases.

Coronavirus lockdown is working out great for at least one registry

The Dutch ccTLD registry has revealed that its volume of new registrations has been growing rapidly since the Netherlands implemented its coronavirus lockdown measures.

“Since the measures came into effect, Dutch entrepreneurs and private individuals registered over 85,000 .nl domain names, 10,000 more than in the same period in 2019,” SIDN said today (translated from the Dutch by Google).

Only about 2% to 3% of these names relate directly to the pandemic, the registry said.

There were 5,930,715 .nl domains registered as of April 20, an increase of about 17,000 from the start of the month.

A survey of registrants carried out for SIDN found that 100% of them intended to use their domains for online-only activities, as opposed to using them to promote a bricks-and-mortar business, for the first time.

SIDN’s good luck may not be shared by all in the industry, however.

ICANN, which is funded by a tax on registration fees, is to host a call next week in which it will explain how it will have to adapt its budget to respond to the impact of the pandemic.

If we take Verisign’s .com as a benchmark, its zone file has grown by roughly 383,000 domains since the end of March. In the same period last year, the increase was 434,000.

Tonight, Verisign is due to report its first-quarter numbers, and no doubt we will get some color on how its bosses think the virus will affect the market.

Four more dot-brands join the gTLD deadpool

Four big-brand gTLDs have asked ICANN to terminate their contracts so far this year, bringing the total number of voluntarily discontinued strings to 73.

Notable among the terminations are two of the three remaining gTLDs being held by luxury goods maker Richemont, both of them Chinese-language generics.

It’s dumped .珠宝 (.xn--pbt977c) which is “.jewelry”, and .手表 (.xn--kpu716f) which is “.watches”.

The company, which applied for 14 gTLDs in the 2012 round, has already gotten rid of nine dot-brands. Only the English-language .watches remains of its former portfolio.

Also being terminated is .esurance, named for an American insurance provider owned by Allstate. This appears to be related to Allstate’s plan to discontinue the Esurance brand altogether this year.

There is still one .esurance domain active and listed in Google’s index: homeowners.esurance.

Allstate continues to own .allstate, which has a few active domains (which forward to its primary .com domain).

Finally, French reinsurance giant SCOR wants rid of .scor, which it has not been using.