ICANN is investigating the ongoing sale of the .org domain administrator of a non-profit organization to a private equity firm and says it might try to block the transfer.
The .org domain is managed by the Public Internet Registry (PIR), a subsidiary of the Internet Society, a non-profit organization. The Internet Society is trying to sell PIR to private equity company Ethos Capital.
ICANN (Internet Corporation for Assigned Names and Numbers) said last week that it sent requests for information to PIR to determine whether the transfer should be allowed. “ICANN will thoroughly evaluate the responses and then ICANN has 30 days to give or withhold its consent to the request,” the organization said.
ICANN, which is also a non-profit, previously told the Financial Times that it “has no control over the proposed acquisition”, making it seem like the sale was practically a foregone conclusion. But even that earlier statement gave ICANN some leeway. ICANN “said it was his job to” ensure the continued functioning of the .org domain “- meaning that it could only stop the sale if the stability and security of the domain name’s infrastructure were compromised,” wrote the Financial Times in November 28.
In its newer statement last week, ICANN noted that the .org registry agreement between PIR and ICANN requires PIR to “obtain prior approval from ICANN before any transaction that would result in a change in the control of the registry operator.”
ICANN can make a “reasonable” objection
The registry agreement allows ICANN to request transaction details, including information about the controlling party, the ultimate parent entity, and whether they meet the criteria established by ICANN for registry operators (as well as financial resources and operational and technical capabilities), said ICANN. The ICANN 30-day assessment period begins after PIR has provided those details.
According to the registry agreement, ICANN said it will apply “a standard of reasonableness” when determining whether the change in control over the .org domain is allowed. As Domain Name Wire noted in a news story, ICANN must block the transfer using that standard “should ultimately be determined by the courts.”
The agreement between PIR and ICANN designates PIR as the registry administrator for the .org top-level domain. It states that “neither party may transfer its rights and obligations under this Agreement without the prior written approval of the other party, which approval shall not be unreasonably withheld.”
Concerns about price increases, transparency
The open sale comes a few months after ICANN has approved a contract change that eliminates price ceilings on .org domain names. The sale has led to concerns that Ethos Capital could impose large price increases.
ICANN says it wants to make the transaction review process more transparent. But ICANN apparently needs PIR’s permission to publish PIR’s request for information and replies, and so far PIR has rejected a request to disclose documents. In last week’s letter to PIR and the Internet Society, ICANN General Counsel and Secretary John Jeffrey urged PIR to make the information public:
As you know, transparency is a cornerstone of ICANN and how ICANN acts to protect the public interest and at the same time fulfill its role. In the light of the interest in the recently announced acquisition of PIR, both within the ICANN community and more generally, we remain of the opinion that it is crucial that your request and the questions and answers follow up on the request and any other related material.
Although PIR has previously rejected our request to publish the request, we recommend that you consider it again. We also think it is of great value to us to publish the questions you are asked and your answers to those questions. We naturally offer you the option of editing parts of the documents that you think contain personally identifiable information before you post and extend that offer here.
As you, (ISOC CEO) Andrew (Sullivan), publicly stated at a webcast meeting in which you participated on December 5, 2019, you feel uncomfortable with the lack of transparency. Many of us who view communication about this transaction are also uncomfortable.
In short, we reiterate our conviction that it is imperative that you undertake to complete this process in an open and transparent manner, starting with publishing the request and related material and enabling us to submit our questions to you and publish your complete answers.
We contacted PIR today and the organization said it could not meet the request to disclose documents due to confidentiality agreements. PIR told Ars:
PIR strives to be transparent with ICANN and the internet community, and PIR is working to answer ICANN’s questions and address why this acquisition will be good for the .org community. But like any company in the middle of an acquisition that is consistent with other audit changes that have been assessed by ICANN, we are limited in what we can disclose due to confidential (it) y agreements with other parties and proprietary information regarding the transaction .
PIR defends sales
PIR CEO Jon Nevett defended current sales in a blog post last week and called it “the best path for the future of .org.”
“(A) A diversified portfolio is much better and less risky than relying on one company like Public Interest Registry – in one industry – for almost all of its financing,” Nevett wrote.
Under the ownership of the Internet Society, PIR has been “in the eternal” harvest “mode, where PIR sends the fruits of our labor to support the great work they do,” Nevett continued. “A relationship with Ethos allows us to invest in .org, allowing us to deliver more to the .org community and the internet in general.”
But critics of the sale want written guarantees that the new owner will not impose major price increases. The Noncommercial Stakeholders Group (NCSG) of ICANN has called on the ICANN board to demand protection of the public interest at the sale. For example, the NCSG said that .org domain registrants should be allowed six months to extend their domains for periods of up to 20 years at the pre-existing annual rate before wholesale prices.
Ethos Capital should also commit to content neutrality with the promise that it “will not suspend or remove domains based on their publication of political, cultural, social, ethnic, religious and personal content, even untrue, offensive, indecent, or unethical material , as protected under the US first amendment, “said the NCSG.
If Ethos Capital refuses to make these commitments, ICANN should “exercise its right” under the register agreement to withhold its approval, the NCSG said.
When Ars contacted Ars, PIR said that its existing agreement with ICANN “requires PIR to be notified of a price increase six months in advance” and that “PIR will respect the terms of that contract under new ownership.” However, PIR has not committed itself to accepting the NCSG proposals.