ICANN Nixes Sale of .Org Registry as Calif. AG, Nonprofit Advocates Applaud
ICANN rejected the proposed sale of Public Interest Registry to Ethos Capital (see 2005010001), Chairman Maarten Botterman blogged Thursday night. Directors said withholding consent to the transfer "is reasonable, and the right thing to do." The deal attracted scrutiny from legislators and at least one state attorney general, and was roundly opposed by nonprofit advocates. The decision "sets a dangerous precedent with broad industry concerns," said Ethos. The rejection restores public confidence, said California Attorney General Xavier Becerra (D).
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ICANN's role was to evaluate the reasonableness of PIR's request for indirect change of control and transfer from a nonprofit to a for-profit organization, Botterman said. The board "was presented with a unique and complex situation" affecting one of the largest registries with more than 10.5 million domain names registered. The review found "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 (generic Top Level Domain) registry." Factors included the change from a public interest nature to an entity "bound to serve the interests of its corporate stakeholders" and the deal's reliance on ICANN as a backstop for enforcing disputes between the .org community and the registry operator "in an untested manner." The entire board stands by the decision, Botterman wrote.
The registry called it a "disappointing decision" that failed to follow ICANN bylaws, processes and contracts. The Internet Society, which owns PIR, said it's "disappointed that ICANN has acted as a regulatory body it was never meant to be." Ethos said it's "evaluating its options." Parties to the deal posted joint comments provided to us when asked for reaction Friday.
Nonprofit organizations are granted favorable legal and tax treatment compared with individuals or for-profit enterprises because by law they must serve the public interest, emailed AG Becerra. "More and more, that premise has come under assault as those with personal profit motives see an easy opening to exploit the special tax and legal treatment reserved for nonprofits." ICANN’s decision "restores some confidence that the non-profit community may continue to be driven by a desire to serve the public, not to make a quick buck at charitable donors’ and taxpayers’ expense,” he wrote.
The decision "is a hard-fought victory for nonprofit Internet users," the Electronic Frontier Foundation blogged. "We're glad ICANN listened to the many voices in the nonprofit world urging it not to support the sale." EFF wants ICANN to do a public consultation to select a new operator for .org.
Several Democrats applauded ICANN's move. Sens. Ron Wyden, Ore.; Elizabeth Warren, Mass.; and Ed Markey, Mass., and Rep. Anna Eshoo, Calif., praised the decision to "put users and nonprofit organizations above private equity rights."
The "real takeaway" is that the resulting situation isn't any better, and is possibly a bit worse, than what could have happened if the deal had gone through, emailed the Internet Governance Project's Milton Mueller. "There is nothing to celebrate here." The opportunity to make important improvements was lost, he added.
ISOC/Ethos "has a large pile of money on the table" and won't let it go away without a fight, emailed IWL Chief Technology Officer Karl Auerbach, a former ICANN board member. He predicted one of the parties will raise questions about ICANN's authority to make the decision, or perhaps revive an earlier question about whether ICANN engages in unlawful restraint of trade.