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How the Sale of .ORG Could Hurt Non-Profits IRL

Private equity firm Ethos Capital’s attempt to take control of .org, the Internet domain that’s home to most of the world’s non-profit and public-benefit organizations, has triggered an interesting crisis in Internet governance. The Internet Corporation for Assigned Names and Numbers, or ICANN, is the body responsible for regulating the global domain name industry. For the first time since oversight responsibility over ICANN was passed from the United States National Telecommunications and Information Administration to the global public (in the form of the Empowered Community) in 2016, that oversight function has been called into action.

Since Ethos Capital’s announcement, critics have pointed out that non-governmental and non-profit organizations all over the world rely on the .org top-level domain, and that important decisions affecting .org must, therefore, be made with the consultation and partnership of that affected community, using the multistakeholder governance process upon which the Internet relies. So far, the community of .org domain holders has neither been notified of nor given a mechanism to participate in the decision-making process.

Although relatively little has been revealed regarding the details of Ethos Capital’s proposal, and mainstream media coverage has been somewhat limited, the real-world consequences of the deal reach much further than the tiny alphabet soup of global internet governance bodies where much of the concern has so far been concentrated.

Many of .org’s more than 10 million registrants use the domain for public-benefit and charitable purposes, including post-disaster public health first-response, security for marginalized groups in post-conflict zones, and public education for disadvantaged communities, among many other critical real-time functions, such as air traffic control. The .org name space was originally intended for non-profit organizations or organizations of a non-commercial character that did not meet the requirements for other generic top-level domains. While some for-profit businesses also use .org for charitable outreach, the domain largely serves as the foundation of non-profit organizations’ online identity, from the International Committee of the Red Cross in Geneva to hyperlocal initiatives at the neighborhood level around the developing world. This vulnerable sector, already dependent on individual goodwill and cooperative endeavor, is now facing the fresh threat of .org’s secretive acquisition by private equity.

The deal’s primary beneficiary is the Internet Society, a non-profit founded in 1992 to promote the use of the Internet for the benefit of all people throughout the world. In 2002, when the Internet Society was first awarded the right to run .org, it set up the Public Internet Registry (PIR) as a non-profit to manage the domain, and the sinecure was renewed for an unprecedented ten-year period in June 2019. A few months later, in November, the acquisition by Ethos was announced.

“The acquisition was approved unanimously by both the Board of Directors of PIR and the Board of Trustees of the Internet Society,” said a January 6 letter signed by Andrew Sullivan, President and CEO of the Internet Society, Jon Nevett, President and CEO of Public Interest Registry, and Erik Brooks, Founder and CEO of Ethos Capital.

Brooks is a former Managing Partner of another private equity firm Abry Partners which in September 2018 acquired Donuts, a domain name registrar with a wide portfolio of new generic top-level domains. In October 2018, former ICANN President of Global Domains Akram Atallah joined Donuts as CEO, while in December 2018 Donuts co-founder Nevett joined PIR as CEO. Other former ICANN staff members are involved in Ethos Capital itself. Former CEO Fadi Chehadé serves as an advisor, and former Senior Vice President, Development and Public Responsibility Programs Nora Abusitta-Ouri serves as Chief Purpose Officer.

PIR’s recent announcement that it would abandon its non-profit status to become a B Corporation—a type of benefit company that operates as a non-profit organization, often with tax-exemption status—has left close observers questioning whether such a return to for-profit status will necessarily entail continued investment in technical stability, and sustained efforts to build a more accessible, inclusive and secure Internet around the world.

“The Internet Society and PIR believe that the sale to Ethos will enhance and support .org’s continued growth and make the domain even more reliable and useful for non-profit organizations and other .org users,” the January 6 letter stated.

It was published in response to a December 23 letter from six members of the U.S. Congress, including Senator Elizabeth Warren, a frontrunner in her party’s primary polls for that country’s 2020 presidential election. The lawmakers urged ICANN to block Ethos Capital from taking over the .org registry, arguing that the “takeover is not in the public interest.”

In their January 6 response, Ethos and PIR state their intention to anchor PIR in a Public Benefit LLC structure that will enshrine the mission of PIR in the governing documents, to maintain PIR’s historical practices on pricing, to form a Stewardship Council as an independent and transparent body that will serve as a resource for both PIR and .org registrants, and to preserve freedom of expression and uphold human rights more broadly.

The letter also assures that “all three parties—PIR, Ethos and the Internet Society—are dedicated to ensuring a smooth and seamless transition, and to continuing the mission-driven purpose of .org and PIR.”

But their deal is already raising concerns about possible domain name registration price-rises. “Does Ethos have plans to increase the revenue from .org to obtain a higher ROI? If so, what are those plans, and how are they consistent with the interests of current and new .org registrants?” reads a question in one document recently published on the Electronic Frontier Foundation website, and transparently titled ‘Questions ICANN Should Ask PIR.’

Since 2003, PIR charged its accredited registrars a capped price of $9.93 per year for each domain name, although the registrars themselves could set the retail charges to end users without restrictions. But in April, ICANN proposed an end to that price cap and effectively removed it in July, in spite of opposition. While seeking to assure registrants that Ethos Capital will continue PIR’s goal of making .org accessible and that it would not hike prices unreasonably, PIR, Internet Society and Ethos Capital have explicitly pointed out that they do have the option to raise prices.

A joint January 7 statement said they are “committing to limit any potential increase in the price of a .org domain registration to no more than 10% per year on average, even though today there are no regulatory pricing constraints on PIR or virtually every other domain name registry.”

Packet Clearing House (PCH), the non-profit that has operated the public-facing servers for .org for the past sixteen years, disclosed detailed insights into the actual relationship between registration prices, operational costs, and technical stability.

“The decreased operational spending necessary for any commercial purchaser to break even would result in an increase from zero down-time to, on average, slightly more than three days without service each year,” a December 12 letter from PCH to ICANN General Counsel John Jeffrey said.

“Three days per year of interrupted communications for millions of not-for-profit organizations would unacceptably damage the stability and functionality of the Internet, and more broadly of society globally,” it said.

“Please do not approve this or any other any transfer of control that cannot demonstrate the financial ability and commitment to maintain operational reliability of the .org domain,” it concluded.

One alternative to Ethos Capital’s bid emerged on January 9, when a group of Internet pioneers and philanthropists filed incorporation papers for the Cooperative Corporation of .ORG Registrants (also called CCOR) in California as a non-profit under cooperative corporation law. It is governed by an uncompensated board of seven directors, including Esther Dyson, who served as ICANN’s first chair; Katherine Maher, CEO of the Wikimedia Foundation; Bevil Wooding, Chief Knowledge Officer of Congress WBN; and Bill Woodcock, Executive Director of PCH.

“Maximizing revenue is explicitly not a goal of the CCOR. Maximizing the security and stability of the Internet are explicit goals,” the incorporation document states.

The Cooperative explicitly pledges support for the open Internet community. Organizations including the Internet Engineering Task Force and eligible root domain name system operators would receive the lesser of one-fourth of gross revenue or the maximum allowable under law.

The incorporation document also articulates CCOR’s commitment to correctly handle data “to ensure that the privacy and other human rights of .org registrants, which include many organizations that handle sensitive health records, facilitate the freedom of the press, and provide platforms for anonymous political speech, are protected.” It remains unclear whether ICANN will exercise its authority to halt the transfer and redelegate the .org domain. Certainly, CCOR’s forthright agenda provides ICANN with the opportunity to treat the future of .org as a competition between proposals, and to step back, evaluate each, then select the best.

Whatever the immediate outcome, it is already clear that if the Empowered Community continues to be excluded from the decision-making process, several actors are willing to exploit other effective channels to voice their concerns. Which is why the upcoming ICANN community meeting in Cancun, Mexico in March promises to become an important forum for continued expressions of intense public opposition and debate, for directly affected constituents and other interested observers alike.

By Gerard Best, Development Journalist

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