ICANN’s repeated betrayals of the public interest have created the conditions for Ethos Capital’s proposed purchase of .Org. The growing outrage directed at ICANN is raising questions about ICANN’s legitimacy and the wisdom of having entrusted ICANN with oversight over the domain name system (“DNS”). ICANN has shown itself to be out of touch with and unresponsive to the public interest. ICANN now has an opportunity to remember its mission and to take steps to restore the public’s trust if it chooses to listen to the clear desire of the public and of the nonprofit community to safeguard .Org.

ICANN’s Purpose is to Act in the Public Interest

ICANN is finding it challenging to live up to its mission and its affirmation of commitments. When the U.S. Government turned over ultimate control of the DNS to ICANN, it was transferring the DNS away from a government that was accountable to the citizens of one nation to a body whose mission is to act in the global public interest. Yet ICANN has no effective mechanism holding it accountable to the global public interest. [1]

The Affirmation of Commitments between the U.S. Department of Commerce (“DOC”) and ICANN is replete with statements confirming that it must serve in the “public interest.” [2] The phrase appears five times within eleven paragraphs. The DOC and ICANN mutually affirmed to ensure that decisions are to be “made in the public interest and are accountable and transparent.” ICANN committed to analyzing the effects of its decisions to “ensure that its decisions are in the public interest, and not just the interests of a particular set of stakeholders.” ICANN committed “to maintain and improve robust mechanisms for public input, accountability, and transparency so as to ensure that the outcomes of its decision-making will reflect the public interest and be accountable to all stakeholders.”

In particular, ICANN committed to “(c) continually assessing and improving the processes by which ICANN receives public input (including adequate explanation of decisions taken and the rationale thereof); (d) continually assessing the extent to which ICANN’s decisions are embraced, supported and accepted by the public and the Internet community.”

As the ICANN Board meets today, it is finding that its actions are not being “embraced, supported and accepted” by the public. Protesters are gathering outside its meeting, [3] tens of thousands of people and hundreds of the leading nonprofits have signed petitions urging that ICANN withhold consent of the transfer of PIR to Ethos Capital, [4] and leading publications are expressing concern about decisions described as a “betrayal.” [5]

A Sense of Betrayal [6]

ICANN’s history with .Org is a story of one betrayal of .org registrants after another. The first betrayal was in 2002, when instead of selecting a registry for .Org that would act in the best interests of .org registrants, they chose ISOC so that ISOC could fund itself through its operation of .Org.

ISOC appealed to many at ICANN because it directed funds to the Internet Engineering Task Force (the IETF), a group of volunteers that develops technical standards for the Internet and that needed some additional funding for their work. ISOC also appealed to many at ICANN because ISOC’s leadership overlapped to an astonishing degree with ICANN’s own leadership.

Rather than fund the IETF or ISOC directly, ICANN allowed ISOC to treat .org registrants as its own piggy bank, extracting money from them to fund itself. Early on, ISOC raised a relatively modest $5 million in disposable funds from operating .org as the prices it could charge for .org domain names were fixed at $6.00 per domain name per year on a relatively small base of .org domain names. ISOC passed about a quarter of those funds along to the IETF.

ICANN’s second betrayal of .org registrants occurred in the renewal of the .org agreement in 2006. In that agreement, ICANN permitted ISOC to raise prices on .org registrants by 10% per year, every year, without needing to justify the price increase, [7] without providing any additional benefits to .org registrants, without linking price increases to the actual funding needs of the IETF, and without any accountability to .org registrants.

ISOC did not take full advantage of its ability to raise prices at first, as it was already generating far more money than it needed to fund the IETF, in part because it was making money on every .org registration and renewal and the number of .org registrations was growing rapidly. But after a few years, ISOC developed an appetite for much higher revenues and raised prices in 2012, 2013, 2015, and 2016. The modest $5 million in disposable funds raised in 2004, by 2018 had turned into a $75 million surplus extracted from .org registrants.

ICANN’s third betrayal occurred when ICANN ceded much of its rights to ISOC. ICANN granted ISOC a presumptive right of renewal, awarding ISOC control of the contract to the registry in perpetuity. ICANN also failed to include a termination upon request for assignment provision that is common in such agreements. The failure to include that language has now emboldened ISOC to attempt to take the value out of the registry when the registry does not belong to it, but to ICANN.

ICANN’s fourth betrayal is that although ICANN claims it does not want to be a price regulator, ICANN strangles the ability of market forces and competition to set prices. The inability of ICANN to put the .Org agreement out for rebid means that ISOC’s fees are not constrained through a competitive bid to operate .Org such that ISOC does not have to demonstrate that its fees are reasonable.

ICANN’s fifth betrayal occurred in the latest .org renewal, when ICANN lifted all price caps on .org domain names. ISOC’s ability to financially exploit .org registrants, previously somewhat constrained, now became unconstrained. This betrayal also included the imposition of Uniform Rapid Suspension (URS) by staff fiat, even though URS had not been adopted as a consensus policy through the ICANN multi-stakeholder model. Further, PIR was empowered to pursue extra-judicial censorship and takedowns, which would enable powerful interests to suppress opposition from those civil society groups using .org domain names. Placing these powers in the hands of a private equity firm and enabling that firm to monetize its ability to inflict harm upon civil society communities that are reliant upon .org websites is a source of tremendous concern from the nonprofit community. [8]

ICANN’s sixth betrayal of .org registrants is underway now. To date, ICANN has shown little appetite for blocking a redelegation of .org to an organization that utterly fails to meet the criteria that ICANN had originally set in its 2002 evaluation of who would be a fit operator for .Org. One of the key criteria in the original evaluation was that the new registry operator provides a public benefit. There is no public benefit to awarding .Org to Ethos Capital. Another key criterion was that the applicant demonstrates its widespread support from the nonprofit community. Ethos Capital faces widespread, vehement opposition from the nonprofit community and from other .org registrants.

ISOC and Ethos Capital are attempting to subvert the criteria ICANN established for determining a worthy operator for .Org. ICANN’s award of .Org was based on ISOC’s characteristics and commitments, not PIR’s. ISOC can sell PIR, but the award of .Org to ISOC should be invalidated if it attempts to circumvent the evaluation criteria [9] that originally allowed ISOC to prevail over ten other bidders. [10]

These cumulative betrayals, assuming ICANN stays true to form and permits the transfer of .Org to Ethos Capital, have destroyed the character of .Org. When ICANN was entrusted with .Org in 2002, its mandate was to award temporary operational control to a group that would manage .Org in the public interest and that would enjoy the support of the nonprofit community, to which .Org’s identity was so closely linked. ICANN is on the verge of permanently ceding control of .Org to a private equity firm, whose goal is to enrich itself by extracting huge sums from .org registrants, including its nonprofit users, and to subject civil society to suppression mechanisms that can be made available for sale to the highest bidder.

Absence of Legitimacy and the Public Interest

ICANN faces a crisis of legitimacy. The insiders who control the levers within ICANN are out of touch with the public interest, or worse; they are paid by registries to sacrifice the public interest for the further enrichment of the registries—especially when the issue at hand is the terms of the agreements that ICANN negotiates with the registries. [11]

For in those negotiations, the registries sit on both sides of the table. They negotiate on their own behalf on one side of the table. ICANN, many of whose board members and executives and policy folks and staffers have ties to the registries, sits on the other side of the table. [12] The outcome is pre-ordained: more money and control for the registries, higher fees for ducking its responsibilities to ICANN, all paid for by exploiting those who must pay registration and renewal prices and ICANN fees if they wish to have their own presence on the Internet—the registrants.

ICANN, under the influence of Verisign and ISOC, have gradually restructured those companies’ relationships to the name spaces they manage. At first, they were merely registry service providers, operating a database and a technical infrastructure under contract to ICANN, with ICANN as trustee for the public interest. Over time, their agreements changed from ones that were rebid periodically to ones that are awarded in perpetuity. Pricing went from flat pricing to the ability to raise prices a set amount without needing to justify a price increase, to the ability, in the case of ISOC, to raise prices without limit on a captive base of registrants. The legacy registries, in particular ISOC, have managed to transform themselves from service providers to de facto owners of the name spaces created under the auspices of the U.S. Government and turned over by the U.S. Government to ICANN to act as trustees for the public interest.

ICANN’s decision

The proposed sale of .org to Ethos Capital has focused global attention on ICANN. The multi-stakeholder model is not completely dead, nor is ICANN entirely under the sway of the registries. There are many committed, well-intentioned people who serve at ICANN. The public is not clamoring for ICANN to agree to a private equity takeover of .Org, but the opposite. This is an opportunity for ICANN to reprioritize its mission to serve the public, to reset its direction in favor of the public interest, and to attempt to reestablish the trust of those communities it serves.

An in-depth look at ISOC’s history with .org is available at ISOC’s Broken Funding Model and Profligate Spending (https://domainnamewire.com/2020/01/22/guest-editorial-isoc/). The article reviews how ISOC used its control over .org to grow a trickle of funds intended to benefit a small group of volunteers into a vast river of funds that it then dissipates on vaguely defined projects of questionable public benefit.

[1] The “Empowered Community” is intended to provide some level of accountability but it is an unproven mechanism and the hurdles to exercise its power are quite high.

[2] See: https://www.icann.org/resources/pages/affirmation-of-commitments-2009-09-30-en

[3] See: http://www.circleid.com/posts/20200123_gnso_council_attend_the_dot_org_protest/

[4] Over 20,000 signatures on the SaveDotOrg petition (https://savedotorg.org/) and over 10,000 signatures on the Fight for the Future petition (https://actionnetwork.org/petitions/stop-the-desecration-of-the-orgs).

[5] See for instance: https://www.economist.com/united-states/2020/01/23/a-proposed-sale-of-rights-to-org-web-addresses-sparks-a-backlash and https://www.washingtonpost.com/opinions/the-end-of-dot-org-as-we-know-it-feels-a-lot-like-giving-up/2020/01/22/49d0fb30-37c3-11ea-bb7b-265f4554af6d_story.html

[6] This section largely draws from ISOC’s Broken Funding Model and Profligate Spending at https://domainnamewire.com/2020/01/22/guest-editorial-isoc/. Sources are cited there.

[7] See: http://www.circleid.com/posts/20200116_part_i_who_pays_when_dot_org_prices_rise/#12621

[8] See: https://www.eff.org/pages/coalition-letter-internet-society

[9] See: https://www.icann.org/en/system/files/correspondence/ncsg-to-botterman-09dec19-en.pdf

[10] Whether ISOC itself satisfactorily met the award criteria in the 2002 award is discussed in https://domainnamewire.com/2020/01/22/guest-editorial-isoc/.

[11] “ICANN, despite protestations to the contrary, is most definitely a very heavy handed regulatory body, one that has unfortunately been captured by those it purports to regulate.” (http://www.circleid.com/posts/20200116_part_i_who_pays_when_dot_org_prices_rise/#12621)

[12] See: https://reviewsignal.com/blog/2019/06/24/the-case-for-regulatory-capture-at-icann/