Are ISOC’s claims about .org’s history bogus?

The Internet Society has started to fight back against those trying to put a stop to its $1.13 billion sale of Public Interest Registry to Ethos Capital.
Among the tactics being deployed appears to be an attempt to play down the notion that .org has always been considered as a home for non-profits run by a non-profit.
Apparently, it’s perfectly fine for .org to transition back into commercial hands, because not-for-profit ISOC was never intended as its forever home and the TLD was never intended for non-profits anyway.
Is that bullshit?
Yes and no. Mostly yes. It turns out you get a different answer depending on when you look in .org’s storied history.
ISOC, it seems, is starting in 1994, in an internet standard written by Jon Postel (who was ICANN before there was an ICANN).
A statement published by ISOC last week tries to characterize .org as a home for the “miscellaneous”, quoting from RFC 1591

I also want to address some other misconceptions about .ORG. Although .ORG has often been thought of as a “home of non-profits”, the domain was not actually defined that way. In 1994, RFC 1591 described it this way: “ORG – This domain is intended as the miscellaneous TLD for organizations that didn’t fit anywhere else. Some non-government organizations may fit here.”

It’s an accurate quote.
.org is described in other RFCs in a similar way. The earliest reference is 1984’s RFC 920 which says .org means “Organization, any other domains meeting the second level requirements.”
RFC 1032 says:

“ORG” exists as a parent to subdomains that do not clearly fall within the other top-level domains. This may include technical-support groups, professional societies, or similar organizations.

I can’t find any mention of non-profits in any of the relevant DNS RFCs.
ISOC goes on to note that .org was managed by a for-profit entity — Network Solutions, then Verisign — from 1993 until PIR took over in 2003.
Again, that’s true, but while it might have been managed by a commercial entity, NetSol was pretty clear about who .org was for.
When it went public in 1997, the company told would-be investors in its S-1 registration statement:

The most common TLDs include .com, used primarily by commercial entities, .org for nonprofit organizations, .net for network service providers, .edu for universities and .gov for United States governmental entities

That’s pretty unambiguous: the .org registry in 1997 said that .org was for non-profits.
In 2001, when ICANN inked a deal with Verisign to spin off .org into a new registry, there was no ambiguity whatsoever.
In announcing the deal, ICANN said that it would “return the .org registry to its original purpose” and .org would return to “to its originally intended function as a registry operated by and for non-profit organizations” (my emphasis).
The price ICANN paid for extracting .org from Verisign’s clutches was the very first “presumptive renewal” clause being inserted into the .com contract, which has seen Verisign reap billions with no risk of ever losing its golden goose.
The prize was so potentially lucrative that Verisign even agreed to give a $5 million endowment — no questions asked — to the successor registry, for use relaunching or promoting .org.
The only catch was that the new registry had to be a non-profit. Commercial registries — Verisign competitors such as Neustar — wouldn’t get the money.
ICANN and its community spent the remainder of 2001 and most of 2002 devising an RFP, accepting proposals from 11 would-be .org registries, and picking a winner.
The multistakeholder Domain Names Supporting Organization — roughly equivalent to today’s GNSO — was tasked with coming up with a set of principles governing who should get to run .org and how.
It came up with a report in January 2002 that stated, as its first bullet point:

The initial delegation of the .org TLD should be to a non-profit organization that is noncommercial in orientation and the initial board of which includes substantial representation of noncommercial .org registrants.

It went on to say that applicants “should be recognized non-profit entities” and to suggest a few measures to attract such entities to the bidding process.
These recommendations, which secured consensus support of the DNSO’s diverse stakeholders and a unanimous vote of the Names Council (the 2002 equivalent of the GNSO Council), nevertheless never made it into ICANN’s final RFP.
At some point during this process, ICANN decided that it would be unfair to exclude for-profit bidders, so there was no non-profit requirement in the final RFP.
As far as I can tell from the public record and my increasingly unreliable memory, it was Vint Cerf — father of the internet, creator of ISOC, then-chair of ICANN, and one of the few people currently cool with PIR being sold into commercial hands — that opened it up to for-profit bidders.
The decision was made at ICANN’s board meeting in Accra, Ghana, at ICANN 12. Back then, the board did its thinking aloud, in front of an audience, so we have a transcript.
The transcript shows that Cerf recommended that ICANN remain neutral on whether the successor registry was non-profit or for-profit. He put forward the idea that a commercial registry could quite easily create a non-profit entity in order to bid anyway, so it would be a kinda pointless restriction. The board agreed.
So in 2002, 11 entities, some of them commercial, submitted proposals to take over .org.
In ISOC’s bid, it stated that it would use the $5 million Verisign endowment “primarily to expanding outreach to non-commercial organizations on behalf of .ORG”.
ISOC/PIR took Verisign’s millions, as a non-profit, in order to pitch .org at other non-profits, in other words.
The evaluation process to pick Verisign’s successor was conducted by consultancy Gartner, a team of “academic CIOs” and ICANN’s Noncommercial Domain Name Holders’ Constituency (roughly equivalent to today’s Non-Commercial Stakeholders Group).
The NCDNHC was under strict instructions from ICANN management to not give consideration to whether the applicants were commercial or non-commercial, but its report (pdf) did “take notice of longstanding relationships between the bidders (whether for-profit or non-profit) and the noncommercial community available in the public record”.
It ranked the PIR bid as third of the 11 applicants, on the basis that .org money would go to support ISOC and the IETF, which NCDNHC considered “good works”.
ICANN’s preliminary and final evaluation reports were both opened for public comment, and comment from the applicants themselves, and on both occasions ISOC sought to play up its not-for-profit status. In August 2002, it said:

Overall, we believe ISOC’s experience as a not-for-profit, Internet-focused organization, combined with Afilias’ expertise as a stable and proven back end provider, enables us to fully meet all the criteria set forth by the ICANN Board.

In October 2002, it said:

We believe strongly that the voice of the non-commercial community is critical to the long-term success of .ORG. ISOC’s global membership and heritage and PIR’s non-profit status will ensure the registry remains sensitive to non-commercial concerns. Should the ICANN Board select ISOC’s proposal, PIR will execute extensive plans to ensure that this voice is heard.

ISOC’s application was of course ultimately determined to be the best of the bunch, and in October 2002 ICANN decided to award it the contract.
Then there was the small matter of the IANA redelegation. IANA is the arm of ICANN that deals with changes to the root zone. Whenever a TLD changes hands, IANA issues a report explaining how the redelegation came about.
In the case of .org, IANA echoed the previous feelings about .org’s “intended” purpose, stating:

the Internet Society is a long-established organization that is particularly knowledgeable about the needs of the organizations for which the .org top-level domain was intended. By establishing PIR as a subsidiary to serve as the successor operator of .org, the Internet Society has created a structure that can operate the .org TLD in a manner that will be sensitive to the needs of its intended users

So, does history tell us that .org is meant to be a TLD by and for non-profits?
Mostly, yes, I think it does.

9 Comments Tagged: .org, acquisition, ethos, ICANN, isoc, netsol, network solutions, nsi, pir, verisign

Criminal .uk suspensions down this year

Nominet suspended fewer .uk domain names due to reports of criminality in the last 12 months that in did in the prior period.
The registry said last week that is suspended 28,937 domains in the year to the end of October, down from 32,813 in the 2018 period.
That’s 0.22% of all .uk names, Nominet said.
As usual, complaints about intellectual property infringement — filed by copyright owners to the IP cops and handed to Nominet — account for the vast majority of takedowns, some 28,606 in the period.
The rest were suspended due to complaints about fraud, trading standards, financial conduct and healthcare products.
Only 16 requests were denied by Nominet, down from 114 in the previous year, and only five false-positive suspensions were reversed.
The controversial ban on “rape” domains resulted in 1,600 new regs getting automatically flagged, but zero getting suspended.
There were no requests from the Internet Watch Foundation to take down child sexual abuse material.
Nominet’s newish automated anti-phishing system, which uses pattern recognition to flag potential phishing domains at point of registration, saw 2,668 domains suspended before going live, of which 274 were released after the registrant passed due diligence checks.

Comment Tagged: .uk, child abuse material, copyright, iwf, law enforcement, nominet, suspensions

Governments kill off another gTLD bid

Another proposed new gTLD has been killed off by governmental intervention.
A Thailand-based company call Better Living Management Company applied for .thai back in 2012, but quickly ran into opposition from the Thai government, which thought the string too culturally sensitive.
The ICANN Governmental Advisory Committee did not object to Thailand’s objection, and issued consensus advice asking ICANN to reject the application, which it did in November 2013.
BLM filed an Independent Review Process complaint in April 2014, alleging irregularities within the GAC, but the appeal was quickly shelved.
Now, five years later, the company has finally withdrawn it application, meaning it gets most of its application fee back as a refund.
Part of the reason the application failed is likely the fact that the Thai ccTLD registry, Thai Network Information Center Foundation, already runs the internationalized domain name ccTLD .ไทย, which means “.thai” in Thai.
Other applications to be killed off by GAC advice include .islam, .halal, .gcc and one of the .africa bids.

Comment Tagged: .thai, better living management, gac, ICANN, new gTLDs

Four big developments in the .org pricing scandal

The renewal of Public Interest Registry’s .org contract and its subsequent acquisition by Ethos Capital is the gift that keeps on giving in terms of newsworthy developments, so I thought I’d bundle up the most important into a single article.
First, ICANN has thrown out the appeal filed by Namecheap and provided a (kinda) explanation of how the recent contract renewal came about.
The board of directors voted to reject Namecheap’s Request for Reconsideration on Thursday, as I reported last week, but the decision was not published until last night.
Namecheap had demanded ICANN reverse its decision to remove the 10%-a-year cap on price increases previously in the .org contract, enabling PIR to unilaterally raise its prices by however much it wants.
It said that ICANN had “ignored” the more then 3,000 people and organizations that had submitted comments opposing the lifting of caps.
But the board said:

ICANN org’s Core Values do not require it to accede to each request or demand made in public comments or otherwise asserted through ICANN’s various communication channels. ICANN org ultimately determined that ICANN’s Mission was best served by replacing price caps in the .ORG/.INFO Renewed RAs with other pricing protections to promote competition in the registration of domain names, afford the same “protections to existing registrants” that are afforded to registrants of other TLDs, and treat registry operators equitably.

The board also decided to describe, in a roundabout kinda way, how it conducts renewal talks with pre-2012 legacy gTLDs, explaining that ICANN “prefers” to move these registries to the 2012 contract, but that it cannot force them over. The resolution states:

All registry agreements include a presumptive right of renewal clause. This clause provides a registry operator the right to renew the agreement at its expiration provided the registry operator is in good standing (e.g., the registry operator does not have any uncured breaches), and subject to the terms of their presumptive renewal clauses.
In the course of engaging with a legacy registry operator on renewing its agreement, ICANN org prefers to and proposes that the registry operator adopts the new form of registry agreement that is used by new gTLDs as the starting point for the negotiations. This new form includes several enhancements that benefit the domain name ecosystem such as better safeguards in dealing with domain name infrastructure abuse, emergency backend support, as well as adoption of new bilaterally negotiated provisions that ICANN org and the gTLD Registries Stakeholder Group conduct from time to time for updates to the form agreement, and adoption of new services (e.g., RDAP) and procedures.
Although ICANN org proposes the new form of registry agreement as a starting place for the renewal, because of the registry operator’s presumptive right of renewal ICANN org is not in a position to mandate the new form as a condition of renewal. If a registry operator states a strong preference for maintaining its existing legacy agreement form, ICANN org would accommodate such a position, and has done so in at least one such instance.

I believe the gTLD referred to in the last sentence is Verisign’s .net, which renewed in 2017 without substantially transitioning to the 2012-round contract.
On the acquisition, the board notes:

the Board acknowledges (and the Requestor points out in its Rebuttal) the recently announced acquisition of PIR, the current .ORG registry operator, and the results of that transaction is something that ICANN organization will be evaluating as part of its normal process in such circumstances.

That appears to be a nod to the fact that ICANN has the power to reject changes of control under exceptional circumstances, per the .org contract.
Despite the wholly predictable rejection of Namecheap’s RfR, appeals against the contract’s new terms may not be over.
For some reason I have yet to ascertain, the very similar RfR filed around the same time by the Electronic Frontier Foundation was not considered, despite being on the agenda for last Thursday’s board meeting.
Additionally, I hear Namecheap has applied for Cooperative Engagement Process status, meaning it is contemplating filing an Independent Review Process appeal.
Second, Ethos Capital, PIR’s new owner, launched a web site in which it attempts to calm many of the concerns, criticisms and conspiracy theories leveled its way since the acquisition was announced.
Found at keypointsabout.org, the site tries to clarify the timing and motivation of the deal.
On timing, Ethos says:

Ethos Capital first approached the Internet Society in September 2019, well after PIR’s contract renewal with ICANN had finished… PIR was not for sale at the time the price caps were lifted on .ORG. The removal of .ORG’s price restrictions earlier this year was not unique to .ORG and was in no way motivated by a desire to sell PIR.

The .org contract was signed at the end of July, so while Ethos may well have been lusting after PIR before the renewal, it apparently did not run towards it with its trousers around its ankles until at least a month later.
On its pricing intentions, Ethos says:

The current price of a .ORG domain name is approximately $10 per year. Our plan is to live within the spirit of historic practice when it comes to pricing, which means, potentially, annual price increases of up to 10 percent on average — which today would equate to approximately $1 per year.

This sounds rather specific, but it’s vague enough to give PIR leeway to, say, introduce a 100% increase immediately and then freeze prices until it averages out at 10% per year. I don’t think the company will do something so extreme, but it would technically be possible the way it’s described here.
On the connections to Abry Partners and former ICANN CEO Fadi Chehade, Ethos says that while founder and CEO Erik Brooks is a 20-year veteran of Abry (which also owns Donuts) “Abry Partners is not involved in this transaction.”
It adds, however, that Chehade’s company, Chehade & Company, where Ethos chief purpose officer Nora Abusitta-Ouri has worked “is an adviser to Ethos”.
What this means, at the very least, is that the new owner of .org allowed an outside contractor to register the domain matching its name in the very gTLD it runs, which most domain veterans will recognize as a rookie mistake.
Ethos goes on to list VidMob Inc, Whistle Sports Inc, Adhark Inc and LiquidX Inc as other companies Ethos has invested in, perhaps rubbishing the hypothesis (which I, admittedly, have publicly floated) that Ethos was a vehicle created by Abry purely to buy up PIR.
Third, Ethos may be funded by “billionaire Republicans”.
.eco registry founder Jacob Malthouse, who’s trying to rouse up support for the #SaveDotOrg campaign, dug up an email apparently sent by ISOC CEO Andrew Sullivan to a members mailing list in the wake of the acquisition announcement, which names some of the backers of the deal.
They are: Perot Holdings, FMR LLC and Solamere Capital.
What they have in common is that they’re all — at least according to Malthouse’s since-amended original post — founded/owned/affiliated with prominent billionaire US Republicans. I’m not sure I’d fully agree with that characterization.
Perot was founded by Ross Perot, who stood for US president as an independent a few times but spent the last couple of decades of his life (which ended in July) as a Republican. I’d say his political affiliation died with him.
FMR, or Fidelity Investments, is run by Abigail Johnson, who inherited the role from her father and grandfather. While she’s made donations to Republicans including local senator, Mitt Romney, she also gave Hillary Clinton a tonne of cash to support her 2016 presidential election run, so I’m not sure I’d necessarily characterize her as die-hard GOP.
Romney himself was involved in the founding of Solamere Capital, the third apparent Ethos investor, but according to its web site he stepped down at the start of this year, long before Ethos was even founded, in order to re-join the US Senate.
I’m not sure what the big deal about these connections is anyway, unless you’re of the (often not unreasonable) belief that you don’t get to be a billionaire Republican without being just a little bit Evil.
Fourth, a bunch of non-profits are campaigning to get the deal scrapped.
The #SaveDotOrg campaign now has its matching .org address and web site, savedotorg.org.
It appears to have been set up by the EFF, but its supporters also include the non-profits American Alliance of Museums, American Society of Association Executives, Aspiration, Association of Junior Leagues International, Inc., Creative Commons, Crisis Text Line, Demand Progress Education Fund, DoSomething.org, European Climate Foundation, Free Software Foundation, Girl Scouts of the USA, Independent Sector, Internet Archive, Meals on Wheels America, National Council of Nonprofits, National Human Services Assembly, NTEN, Palante Technology Cooperative, Public Knowledge, R Street Institute, TechSoup, VolunteerMatch, Volunteers of America, Wikimedia Foundation, YMCA of the USA and YWCA USA.
The letter (pdf) states:

Non-governmental organizations all over the world rely on the .ORG top-level domain. Decisions affecting .ORG must be made with the consultation of the NGO community, overseen by a trusted community leader. If the Internet Society (ISOC) can no longer be that leader, it should work with the NGO community and the Internet Corporation for Assigned Names and Numbers (ICANN) to find an appropriate replacement.

It claims that the new .org contract gives PIR powers to “do significant harm” to non-profits, should they be abused.
The campaign has had a little traction on social media and so far has over 8,000 signatures.

7 Comments Tagged: .org, abry, acquisition, eff, ethos, ICANN, isoc, namecheap, pir, price caps

DI Leaders Roundtable #3 — What did you think of ICANN 66?

It’s time for the third in the series of DI Leaders Roundtables, in which I pose a single question to a selection of the industry’s thought leaders.
With ICANN 66 taking place a couple of weeks ago in Montreal, Canada, a multitude of topics came under public discussion, among them: DNS abuse, the .amazon gTLD application, access to Whois data and geographic names protections.
So, this time around, I asked:

What was your biggest takeaway from ICANN 66?

And this, in no particular order, is what they said:
Frank Schilling, CEO, Uniregistry

What a great industry… So many stable players with fresh ideas. Innovators who cross pollinate and stay with the industry in spite of the fact that there is no new gold and obvious money-making opportunity at the moment. Many stable operators trying new things and growing the industry from the inside out.

Michele Neylon, CEO, Blacknight

There weren’t any big surprises at ICANN 66. As I expected there were a couple of topics that many people were focussed on and they ignored pretty much everything else.
The biggest single topic was “abuse”. It’s not a “new” topic, but it’s definitely one that has come to the fore in recent months.
Several of us signed on to a “framework to address abuse” in the run up to the ICANN meeting and that, in many respects, may have helped to shift the focus a little bit. It’s pretty clear that not all actors within the eco system are acting in good faith or taking responsibility for their actions (and inactions). It’s also pretty clear that a lot of us are tired of having to pay the cost for other people’s lack of willingness to deal with the issues.
Calls for adding more obligations to our contracts are not welcome and I don’t think they’ll help deal with the real outliers anyway.
There’s nothing wrong in theory with offering cheap domain names but if you consciously choose to adopt that business model you also need to make sure that you are proactive in dealing with fraud and abuse.

Ben Crawford, CEO, CentralNic

That M&A has become the dominant business activity in the domain industry.

Milton Mueller, Professor, Georgia Tech

My takeaways are shaped by my participation on the EPDP, which is trying to build a “standardized system of access and disclosure” for redacted Whois data. The acronym is SSAD, but it is known among EPDP aficionados as the “So-SAD.” This is because nearly all stakeholders think they want it to exist, but the process of constructing it through an ICANN PDP is painful and certain to make everyone unhappy with what they ultimately get.
The big issue here concerns the question of where liability under the GDPR will sit when private data is released through a So-SAD. Registrars and registries would like to fob off the responsibility to ICANN; ICANN tells the world that it wants responsibility to be centralized somehow in a So-SAD but ducks, dodges and double-talks if you ask it whether ICANN org is willing to take that responsibility.
ICANN’s CEO, who fancies himself a European politician of sorts, has driven the EPDP team batty with a parallel process in which he ignores the fact that the EPDP team has all stakeholders represented, lawyers from contracted parties and data users, and privacy experts on it, as well as formal legal advice from Bird and Bird. Instead he feels compelled to launch a parallel process in which ICANN org goes about trying to make proposals and then ask European authorities about them. He has asked a bunch of techies unaware of the policy issues to design a So-SAD for us and is now badgering various European agencies for “advice” and “guidance” on whether such a system could centralize legal responsibility for disclosure decisions. The parallel process, known as the Strawberry team, was featured in the public meeting on Whois reform as if it was of equal status as the formally constituted EPDP.
But a great ICANN 66 takeaway moment occurred during that moment. The European Commission’s Pearce O’Donoghue told the assembled multitudes that a SoSAD “WOULD NOT…REMOVE THE LIABILITY OF THE DATA CONTROLLER, WHICH IS THE REGISTRAR OR THE REGISTRY. SO WE WOULD HAVE A QUESTION AS TO WHETHER IT IS ACTUALLY WORTH THAT ADDED COMPLEXITY.” So, bang, the request for European advice blew up right in Goran Marby’s face. Not only did he get a critical piece of advice on the most important issue facing the SoSAD and the EPDP, but he got it without going through the elaborate parallel process. No doubt there is now furious behind the scenes lobbying going on to reverse, change or step back from O’Donoghue’s comment. Marby has been quoted (and directly seen, by this writer) as claiming that with the submission of the Strawberry team’s formal request for “guidance” from the European Data Protection Board being submitted, he is now “done” with this. Let’s hope that’s true. My takeaway: ICANN org and all of its fruity concoctions needs to get out of the way and let the PDP work.
The final EPDP-related takeaway is that the biggest decision facing the EPDP as it makes policy for the So-SAD is who makes the disclosure decision: registrars who hold the data, or ICANN? Everyone agrees with centralizing the process of requesting data and hooking up to a system to receive it. But who makes the decision is still contested, with some stakeholders wanting it to be ICANN and others wanting it to reside with the contracted parties. It seems obvious to me that it has to be the registrar, and we should just accept that and get on with designing the So-SAD based on that premise.

Jothan Frakes, Executive Director, Domain Name Association

A few: WHOIS (or Lookup) remains challenging territory, registries and registrars > are not inactive about addressing abuse while avoiding becoming content police, and poutine is delicious.

Christa Taylor, CMO, MMX

From my perspective, the biggest takeaway is the level of industrious efforts, transformation and passion throughout the industry. Every meeting and dinner consisted of a broad range of organizations and people with diverse perspectives on industry topics resulting in thought-provoking debates or conceptual brainteasers. Compared to a year ago, the conversations have materially changed — impacted from industry consolidations, system updates and developments along with organizational transitions to streamline business in one method or another. While there is still plenty of work ahead of us, both within the industry and ICANN, it’s satisfying to reflect and realize that progress is being achieved, cooperation benefits all and no matter how long the tunnel might be, there is light.

4 Comments Tagged: abuse, di leaders roundtable, epdp, icann 66, whois

Petition launched to fight .org deal

A petition has been opened on Change.org calling for the acquisition of Public Interest Registry by Ethos Capital.
The petition calls on ICANN, the Internet Society and PIR to “suspend” the sale “pending an open, transparent and multi-stakeholder public process about the future of .ORG.”
It was started by Jacob Malthouse, who worked at ICANN over a decade ago but is perhaps better known more recently as a founder and co-CEO of Big Room, the .eco gTLD registry. He appears to have left that company in August.
He blogged last week expressing his dismay with the news of the acquisition.
“This is a very sad day for the progressive movement. We need infrastructure like this and we need it to stay run by and for nonprofits, where it can be managed in a transparent and accountable fashion,” he wrote.
Almost two days in, the petition has attracted a piddling 32 signatures. That’s about 1% of the number of people who chose to email ICANN to protest .org price increases earlier this year, voices that ICANN nevertheless found unpersuasive.
The acquisition, for an undisclosed sum believed to be in the hundreds of millions of dollars at the least, was announced last week.

10 Comments Tagged: .org, acquisition, big room, ethos capital, ICANN, isoc, petition, pir, price caps

ICANN board meets to consider PIR acquisition TODAY

ICANN’s board of directors will gather today to consider whether the acquisition of Public Interest Registry by a private equity company means that it should reverse its own decision to allow PIR to raise .org prices arbitrarily.
Don’t get too excited. It looks like it’s largely a process formality that won’t lead to any big reversals, at least in the short term.
But I’ve also learned that the controversy could ultimately be heading to an Independent Review Process case, the final form of appeal under ICANN rules.
The board is due to meet today with just two named agenda items: Reconsideration Request 19-2 and Reconsideration Request 19-3.
Those are the appeals filed by the registrar Namecheap in July and rights group the Electronic Frontier Foundation in August.
Namecheap and EFF respectively wanted ICANN to reverse its decisions to remove PIR’s 10%-a-year price-raising caps and to oblige the registry to enforce the Uniform Rapid Suspension anti-cybersquatting policy.
Both parties now claim that the sale by the Internet Society of PIR to private equity firm Ethos Capital, announced last week, casts new light on the .org contract renewal.
The deal means PIR will change from being a non-profit to being a commercial venture, though PIR says it will stick to its founding principles of supporting the non-profit community.
I reported a couple of weeks ago that the board had thrown out both RfRs, but it turns out that was not technically correct.
The full ICANN board did in fact consider both appeals, but it was doing so in only a “preliminary” fashion, according to an ICANN spokesperson. ICANN told me:

On 3 November the Board considered “proposed determinations” for both reconsideration request 19-2 and 19-3. In essence, the Board was taking up the Board Accountability Mechanism Committee (BAMC) role, as the BAMC had not been able to reach quorum in early November due to certain recusals by BAMC members.
Once the Board adopted the proposed determinations (in lieu of the BAMC issuing a recommendation to the Board) the parties that submitted the reconsideration requests had 15 days to submit a rebuttal, for the Board’s full consideration of the matter, which is now on the agenda.

Normally, RfRs are considered first by the four-person BAMC, but in this case three of the members — Sarah Deutsch, Nigel Roberts, and Becky Burr — recused themselves out of the fear of appearing to present conflicts of interest.
The committee obviously failed to hit a quorum, so the full board took over its remit to give the RfRs their first pass.
The board decided that there had been no oversights or wrongdoing. Reconsideration always presents a high bar for requestors. The .org contract was negotiated, commented on, approved, and signed completely in compliance with ICANN’s governing rules, the board decided.
But the ICANN bylaws allow for a 15-day period following a BAMC recommendation during which rejected RfR appellants can submit a rebuttal.
And, guess what, both of them did just that, and both rebuttals raise the PIR acquisition as a key reason ICANN should think again about the .org contract changes.
The acquisition was announced a week ago, and it appears to have come as much of a surprise to ICANN as to everyone else. It’s a new fact that the ICANN board has not previously taken into account when considering the two RfRs, which could prove important.
Namecheap reckons that the deal means that PIR is now almost certain to raise .org prices. New gTLD registry Donuts was bough by Ethos affiliate Abry Partners last year, and this year set about raising prices across the large majority of its 200-odd gTLDs. Namecheap wrote in its rebuttal:

Within months of be acquired by Abry Partners, it raised prices in 2019 for 220 out of its 241 TLDs. Any statements by PIR now to not raise prices unreasonably are just words, and without price caps, there is no way that .org registrants are not used a source to generate revenue for acquisitions or to pay dividends to its shareholders.

It also said:

The timing and the nature of this entire process is suspicious, and in a well-regulated industry, would draw significant scrutiny from regulators. For ICANN not to scrutinize this transaction closely in a completely transparent and accountable fashion (including public disclosure of pertinent information regarding the nature, cost, the terms of any debt associated with the acquisition, timeline of all parties involved, and the principals involved) would demonstrate that ICANN org and the ICANN Board do not function as a trusted or reliable internet steward.

Namecheap also takes issue with the fact that ICANN’s ruling on its RfR (pdf) draws heavily on a 2009 economic analysis by Professor Dennis Carlton, which concluded that price caps were unnecessary in the new gTLD program.
The registrar trashes this analysis as being based on more opinion than fact, and says it is based on outdated market data.
Meanwhile, the EFF’s rebuttal makes the acquisition one of four reasons why it thinks ICANN should reverse course. It said;

ICANN must carefully reexamine the .ORG Registry Agreement in light of this news. Without the oversight and participation of the nonprofit community, measures that give the registry authority to institute new [Rights Protection Mechanisms] or make other major policy changes invite management decisions that conflict with the needs of the .ORG community.

Quite often, RfRs are declined by ICANN because the requestor does not present any new information that the board has not already considered. But in this case, the fact of the PIR acquisition is empirically new information, as it’s only week-old news.
Will this help Namecheap and the EFF with their cause? The board will certainly have to consider this new information, but I still think it’s unlikely that it will change its mind.
But I’ve also learned that Namecheap has filed with ICANN to trigger a Cooperative Engagement Process procedure.
The CEP is an often-lengthy bilateral process where ICANN and an aggrieved party attempt to resolve their differences in closed-door talks.
When CEP fails, it often leads to an Independent Review Process complaint, when both sides lawyer up and three retired judges are roped in to adjudicate. These typically cost both sides hundreds of thousands of dollars in legal fees.
CEP and IRP cases are usually measured in years rather than months, so the PIR acquisition could be under scrutiny for a long time to come.

14 Comments Tagged: .org, acquisition, cep, eff, ICANN, irp, isoc, namecheap, pir, price caps, reconsideration, rfr

XYZ buys dormant gTLD from “pyramid scheme” operator

XYZ.com has bought another unused dot-brand to add to its portfolio.
It’s taken over the contract for .quest from original registry Quest ION Ltd, a subsidiary of a Hong Kong-based multi-level marketing company called QNet, according to ICANN records.
The gTLD will become the 13th that XYZ has a stake in, and the second dormant dot-brand that it’s acquired, after .monster.
.quest has been delegated for a few years, but its owner had no live domains beyond the mandatory NIC site.
I have to say I was unfamiliar with the company until today, but QNet’s Wikipedia page makes it sound sufficiently dodgy that I’m surprised nobody raised questions about its suitability to be a registry during the ICANN application process.
Its multi-level marketing business model has been described as a “pyramid scheme” or “Ponzi scheme” by various governments and has seen QNet hit by serious legal challenges in many countries on at least four continents.
Loads of its executives, including at least one listed on the gTLD application, have been arrested over the years.
But I guess that’s water under the bridge now, because XYZ has taken control of .quest.
There’s no word yet on a launch date.

Comment Tagged: .qnet, .quest, .xyz, acquisition, assignment, dot-brands, ICANN, new gTLDs, xyz.com

I attempt to answer ICA’s questions about the “terrible blunder” .org acquisition

The Internet Commerce Association launched a withering attack on ICANN late last week, accusing the organization of a “terrible blunder” by lifting pricing restrictions on .org domain names.
As by now you’re no doubt aware, .org manager Public Interest Registry was acquired last week by a private equity firm with ties to ICANN’s former CEO, in a deal likely to have delivered hundreds of millions of dollars, if not more, to former owner the Internet Society.
The deal means PIR is now almost certain to exercise its newfound right to raise its prices arbitrarily, adding tens of millions to its annual top line at the expense of .org registrants.
While such a price increase is likely to have little impact on most registrants — an annual increase of even 100% would only add about $10 to the per-domain cost — it would certainly prove onerous to many of the high-volume domain investors ICA represents.
So ICA chief Zak Muscovitch whipped off a letter to ICANN (pdf) on Friday, demanding that ICANN use its contractual powers to terminate PIR’s registry agreement and put .org out for open tender. He wrote:

If you were led to believe that removing price caps on .Org domain names was a sound approach because the registry would remain in the hands of a nonprofit foundation, you have clearly been misled. If you were led to believe that despite being the effective owner of the .org registry, you were somehow forced to let your service providers tell you how much they can charge, instead of the other way around, you have been led astray. If you have been told that .Org does not have market power within the nonprofit sector, you have been led astray. If you have been told that competition from other gTLDs will constrain .org prices, you have been led astray.

I think the letter has about as much chance of working as an ice sculptor in hell, but Muscovitch does include a list of seven questions for ICANN that I’m going to attempt to answer to the best of my ability here.
First, he asks:

Were you aware whether ISOC was in talks to sell the registry when you approved the removal of the price caps?

I put the same question to PIR CEO Jon Nevett last week, and he told me: “I don’t know when the talks started with ISOC and the buyer, but neither ICANN nor PIR knew about it when finalizing the .ORG [Registry Agreement].”
I’ve no particular reason to believe he’s lying.

If ISOC was in such talks at that time, why was this material fact not disclosed to you by the registry operator, prior to you approving the renewal agreement?

The acquisition talks between ISOC and Ethos Capital certainly could have been going on prior to the .org contract being signed, which happened June 30 this year.
The main piece of evidence here is that Fadi Chehadé of private equity firm and presumed Ethos affiliate Abry Partners registered the domain ethoscapital.org on May 7, according to Whois records. A company of the same name was formed in Delaware a week later.
Given that Ethos appears to be an Abry vehicle set up purely to acquire PIR, it seems likely that talks were already underway at this point.
The domain ethoscapital.com, which Ethos is currently using as its primary, seems to have been acquired on the secondary market around August. The acquisition was announced November 13.
To Muscovitch’s question, though, I return to Nevett’s line that PIR knew nothing about the acquisition talks before the RA was finalized.
The RA was finalized and opened to public comment in March.
It’s quite possible Ethos and ISOC entered talks in the three months after the deal had been finalized but before it had been signed.

When did you first learn of the negotiations to sell the .Org registry?

An excellent question I’ve also posed but as yet have no answer to.

Did you base your decision to approve the removal of price caps, at least in part, on the expectation or belief that the registry would continue to be operated by a nonprofit organization with a public commitment to maintaining a stable pricing environment, instead of on behalf of a private equity firm whose objective is to maximize profits for its funders?

Cheekily, I’m going to take ICANN at its word and say the answer is “yes”.
One of the controversies concerning the .org renewal was that ICANN seemingly ignored thousands of comments calling for the retention of price caps.
This, ICANN has denied, saying that it “reviewed and evaluated” every comment.
Among the very few comments that weren’t outright condemnations of the decision to remove price caps were two nuanced, arguably ambivalent, analyses from two influential ICANN structures — the At-Large Advisory Committee and the Non-Commercial Stakeholders Group.
ALAC’s eight-page comment (pdf) was very much of the “on the one hand…” variety, but it paid special attention to ISOC’s public interest works when putting forward the view that uncapped pricing might be a good thing, noting (and quoting itself):

a significant portion of .ORG registration fees “are returned to serve the Internet community [through] redistribution of .org funds into the community by the Internet Society, to support Internet development.”… ISOC’s goals and priorities, while far broader than At-Large (and even ICANN), parallel those of At-Large and the interests of end-users. Many At-Large Structures are also ISOC Chapters, further demonstrating the commonality of interests.

NCSG, meanwhile, said in its comments (pdf) that price caps should remain, but increased from the 10%-per-year level. It acknowledged that some .org money flows into funding NCSG.
So there’s two influential groups, both with organizational and/or funding ties to ISOC, saying price increases may be a good thing because ISOC acts in the public interest.
And ICANN said it read and absorbed all the comments, so I’m cheekily going to say that yes, ICANN at least in part renewed the .org contract in the belief that PIR would continue to be a non-profit and act in the public interest.

Had you been aware of the planned sale of the .Org registry to a private equity firm, would you have treated the renewal of the .Org registry agreement and the removal of price caps as worthy of robust discussion and a vote by the Board, such that perhaps the terms of the agreement would have been modified?

I’m going to go out on a limb here and say hell, no. ICANN doesn’t want to be a pricing regulator, regardless of the registry operator, in my view. It’s only the US government that’s preventing it lifting price restrictions on .com, I reckon.

What involvement did your former CEO, Mr. Chehade and your former SVP, Ms. Abusitta-Ouri, have in the decision to employ the base gTLD registry agreement for legacy TLDs during their tenure, if any?

In Chehadé’s case, the answer is fairly clear. Even if he did not have a hands-on role in the decision to cajole legacy gTLD registries toward the 2012 agreement, it all happened on his watch so he bears ultimate responsibility.
It’s worth noting, perhaps, that most of the legacy gTLD agreements that migrated over to the new gTLD agreement’s standard language happened not only while Chehadé was at the helm, but also after he’d already accepted his new job at Abry.
He announced his early resignation in May 2015, telling the AFP at the time that he already had a job lined up in the commercial sector, but he declined to give specifics.
He’d probably made his mind up to quit some time before the announcement. He registered the domain name chehade.company, which he now uses for his investment vehicle Chehadé & Company, in the April.
He revealed he was joining Abry as senior advisor on digital strategy in August that year, but didn’t actually leave until March 2016.
During that interim, lame-duck period ICANN negotiated and signed (all in October 2015) renewals for 2003-round gTLDs .pro, .cat and .travel, all of which incorporated 2012 contract language related to, for example, the Uniform Rapid Suspension process.
Three months before Chehadé’s resignation announcement, ICANN signed a very similar deal with .jobs, the first time it had incorporated 2012 language into a legacy gTLD contract.
These contracts were all signed for ICANN not by Chehadé but by his long-time buddy, frequent co-worker and then-president of the Global Domains Division, Akram Atallah (who is now CEO of Donuts, which is owned by Abry).
Since Chehadé’s departure, ICANN has also taken the same contract renewal stance with TLDs including .xxx, .mobi, .museum and .aero.
By 2016 it had become standard operating practice at ICANN to nudge registries towards the 2012-round contract, as Atallah explained to then-ICA lead Phil Corwin at ICANN’s Hyderabad meeting in November 2016. Atallah stated (pdf):

So basically the negotiations are — the registries come and ask for something, and we tell them please adopt the new gTLD contract. And if they push back on it and they say they don’t want something, we can’t force them to take it. It’s a negotiation between two parties. And I think it’s within the remit of the corporation to negotiate its contracts. If the policy comes back and says that the URS is not something that we want to have as a policy, of course, we would support that.

As regards Nora Abusitta-Ouri, Ethos’s “chief purpose officer”, her former job title of “senior VP for development and public responsibility programs” suggests she had little to no involvement in gTLD contractual issues.
While her LinkedIn profile doesn’t mention it, she appears to have become chief engagement officer at Chehadé & Company after her stint at ICANN ended in July 2016.

What restrictions do you have in place with respect to cooling-off periods for former executives?

Fuck all, clearly.

25 Comments Tagged: .org, abry, chehade & company, ethos, ica, ICANN, pir, price caps

Selling off PIR, did ISOC just throw .org registrants under a bus?

Public Interest Registry is to lose its not-for-profit status, dramatically increasing the chances of .org price increases, under an acquisition deal announced this evening.
The Internet Society is selling PIR to a brand-new private investment firm called Ethos Capital Investors, which is run by two people with ties to the domain industry.
PIR CEO Jon Nevett told DI today that the company is no longer a non-profit following the transaction, and that ISOC will no longer receive a slice of every .org registration fee.
There’s a lot to unpick here.
The biggest concern is arguably that the deal substantially increases risk for .org registrants.
PIR was recently, and very controversially, granted the right to raise its prices from $9.93 per year to whatever-the-hell-it-wants per year, due to a renegotiation of its ICANN contract that scrapped its longstanding 10%-per-year price increase caps.
Many domain investors and non-profits called for the caps to remain. Uncontrolled pricing could lead to smaller charities, for example, being priced out of their decades-held domains, it was claimed.
But PIR repeatedly assured concerned registrants that it was “a mission driven non-profit registry and currently has no specific plans for any price changes”.
That tune has changed, if only a little, today. Nevett told us:

Our goal has always been to make .ORG accessible and reasonably priced — and that will continue under our new ownership. PIR has made reasonable decisions on price in the past, and we will uphold this spirit going forward. We would never make dramatic price increases as we know it would harm our registrants, as well as our registrars.

PIR also says it plans to establish an advisory council and fund to ensure its founding principles are upheld, and to apply for “B Corporation” certification.
B Corp is a private program run by a non-profit called B Lab that certifies companies that meet certain social, environmental and transparency standards, but it has no legal recognition in, for example, the US tax code.
Nevett told us today that he does not know how long ISOC was negotiating the sale, but that neither PIR nor ICANN knew of it during their contract talks.
We know very little about the new owner. Its web site, which appears to have been created very recently, merely provides bios of its two principals.
These are founder and CEO Erik Brooks, who this year quit the private equity firm Abry Partners after 20 years.
Abry, you may recall, is the company that hired former ICANN CEO Fadi Chehade in 2016 and gobbled up new gTLD registry Donuts in September last year.
His second is Nora Abusitta-Ouri, named as “chief purpose officer”, who’s apparently tasked with overseeing the moral “ethos” of the company’s investments.
Abusitta-Ouri is a former ICANN staffer who most recently held the role of senior VP for development and public responsibility programs until her 2016 departure. She’s also executive director of the Digital Ethos Foundation.
In short, based on what little information is publicly available, it appears that Ethos was set up purely for the purpose of acquiring PIR. It’s not at all clear where the money to fund the deal is coming from.
The acquisition price has not been disclosed, but given that PIR was grossing over $90 million a year at the last count, I doubt Brooks and Abusitta-Ouri are paying out of their own pockets.
Whoever’s backing this is going to want a return, and the best way to quickly soup up PIR’s growth would be to take advantage of its newfound ability to raise .org prices arbitrarily.
More than half of PIR’s revenue before today — close to $50 million a year — was handed directly to ISOC, to fund its capacity-building and education projects worldwide.
That’s all over now, which begs the question of how it will continue to fund itself in future. My guess is that, now that it has hundreds of millions of dollars in the bank, and is talking about an “endowment”, it’s going to stash its windfall in high-interest accounts and live off that income.
Meanwhile, whatever assurances .org registrants had that PIR was going to remain a non-profit concern have been utterly trashed.
UPDATE: Thanks to domain lawyer John Berryhill for pointing out in the comments that the domain name ethoscapital.org was registered by Abry’s Fadi Chehadé on May 7 this year. Additionally, a commenter on Domain Name Wire tonight noted that a company called Ethos Capital LLC was formed in Delaware on May 14, a day after ICANN published its summary of the .org contract renewal’s public comment period.

12 Comments Tagged: .org, abry, ethos, ICANN, isoc, pir, price caps, public interest registry