ICANN Board has rejected the proposed change of control request for the transfer of PIR from the Internet Society (ISOC) to Ethos Capital. In a decision made on Thursday, the ICANN Board said: “withholding consent of the transfer of PIR from the Internet Society (ISOC) to Ethos Capital is reasonable, and the right thing to do,” based on various factors that the Board believes will create unacceptable uncertainty for the future of .ORG, the third-largest gTLD registry. Factors mentioned include:

• Concern over ICANN “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.”
• Enforcement of disputes: “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 full Board resolutions are posted here on the ICANN website.

In a letter on Friday, Andrew Sullivan, ISOC President, and CEO expressed his disappointment over ICANN’s decision. He wrote: “ICANN took much longer than it should have to render its decision, and in my view, stretched beyond its own agreements and the remit in its bylaws. I am also concerned that ICANN has shown itself to be much more susceptible to political pressure than its mandate would recommend. Nevertheless, I am grateful that ICANN has now rendered a clear decision. This decision means that the period of uncertainty is over.”

PIR says the decision is a failure of ICANN to follow its bylaws, processes, and contracts. EFF, one of the leading critics of the proposed sale, claimed victory stating, “[t]he sale threatened to bring censorship and increased operating costs to the nonprofit world.” Moving forward, EFF suggests, “ICANN should hold an open consultation, as they did in 2002, to select a new operator of the .ORG domain that will give nonprofits a real voice in its governance, and a real guarantee against censorship and financial exploitation.”

Ethos Capital expressed its disappointment immediately following the decision stating ICANN has “set a dangerous precedent with broad industry implications.” Ethos says it is evaluating its options and accuses ICANN of suffocating innovation and deterring future investment in the domain industry. “ICANN has empowered itself to extend its authority into areas that fall well outside of its legal mandate in acting as a regulatory body. Today’s decision also creates an uncertain and unpredictable business environment, where the enforceability and value of the ICANN contract itself may be called into question now that the rules of transferring ownership are open to influence by outside interests. Ethos is evaluating its options at this time.”