ICANN blocks transfer of .org to for-profit group

The Internet Corporation for Assigned Names and Numbers (ICANN) has rejected a proposal involving the sale of the .ORG top-level domain to a for-profit institution.

“After completing extensive due diligence, the ICANN Board finds that withholding consent of the transfer of Public Interest Registry (PIR) from the Internet Society (ISOC) to Ethos Capital is reasonable, and the right thing to do,” ICANN stated.

ICANN’s pronouncement comes after it faced heavy criticism for allowing the proposal to proceed as far as it has.

There were concerns over the lack of transparency in Ethos Capital’s structure and a report that several of the people behind the deal to acquire the .ORG namespace are former ICANN officials.

Concerns were also raised that the deal is just a typical debt-leveraged buyout. The company managing .ORG would have reportedly been left saddled with $360 million in debt to service if the deal were allowed to go through.

ICANN said that it was presented with a unique and complex situation impacting one of the largest registries, as .ORG has more than 10.5 million domain names registered.

“After completing its evaluation, the ICANN Board finds that the public interest is better served in withholding consent as a result of various factors that create unacceptable uncertainty over the future of the third-largest gTLD registry,” it stated.

It highlighted the following factors which were considered in making its decision:

  • A change from the fundamental public interest nature of PIR to an entity that is bound to serve the interests of its corporate stakeholders, and which has no meaningful plan to protect or serve the .ORG community.
  • ICANN is being asked to agree to contract with a wholly different form of entity; instead of maintaining its contract 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.
  • The US$360 million debt instrument forces PIR to service that debt and provide returns to its shareholders, which raises further question about how the .ORG registrants will be protected or will benefit from this conversion. This is a fundamental change in financial position from a not-for-profit entity.
  • There are additional uncertainties, such as an untested Stewardship Council that might not be properly independent, or why PIR needs to change its corporate form to pursue new business initiatives.
  • The transaction as proposed relies on ICANN as a backstop for enforcement of disputes between the .ORG community and the registry operator in an untested manner.

“The entire Board stands by this decision. After thorough due diligence and robust discussion, we concluded that this is the right decision to take,” ICANN stated.

“While recognizing the disappointment for some, we call upon all involved to find a healthy way forward, with a keen eye to provide the best possible support to the .ORG community.”

.ORG needs new management — EFF

The Electronic Frontier Foundation (EFF) welcomed ICANN’s decision.

“This decision by ICANN is a hard-fought victory for non-profit Internet users,” the EFF stated.

“But the .ORG registry still needs a faithful steward, because the Internet Society has made clear it no longer wants that responsibility.”

The EFF suggested that ICANN should hold an open consultation, similar to one it held in 2002, to select a new operator of the .ORG domain.

This new operator must give non-profits a real voice in its governance, and a real guarantee against censorship and financial exploitation, the EFF said.

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ICANN blocks transfer of .org to for-profit group