The nonprofit organization that manages domain names has rejected a proposal to sell the .org top-level domain to a private company, and organizations all over the world that have a .org website breathed a sigh of relief.

Ethos Capital, a Pennsylvania-based private equity group, submitted an offer in November to buy the Public Interest Registry (PIR), which operates the .org domain, from the Internet Corporation for Assigned Names and Numbers (ICANN), a nonprofit private-public organization, for a $1 billion endowment, according to ICANN’s board minutes.

ICANN in a blog post called the rejection of the .org sale the “right thing to do,” saying their organization’s mission is to maintain the operational stability of the internet, and selling the domain would create “unacceptable uncertainty” for the domain’s millions of registered users. ICANN described the potential sale as, “a change from the fundamental public interest nature of PIR to an entity that is bound to serve the interests of its corporate stakeholders, and which has no meaningful plan to protect or serve the .ORG community.”

Not to mention the move would leave PIR with $360 million in debt, which would likely destabilize its operation.

After ICANN announced the potential .org sale, an avalanche of letters hit their mail box opposing the sale from industry professionals and politicians—including a letter from California’s attorney general Xavier Becerra—and “virtually no counterbalancing support” from anyone except from Ethos Capital and its advisors, ICANN’s board minutes show.

Several congress members, including former Democratic presidential primary contender, Elizabeth Warren, released a statement applauding ICANN’s decision. “I’m glad ICANN listened to our concerns and blocked a private equity takeover of the .org domain registry, which would have raised costs on .org websites and threatened them with censorship. This is good news for nonprofits and everyone who relies on a free and open internet,” Warren said.

As you might expect, Ethos Capital wasn’t happy with the decision. “Today’s action opens the door for ICANN to unilaterally reject future transfer requests based on agenda-driven pressure by outside parties,” the organization stated. “It allows ICANN to base its decisions on a subjective interpretation of what it deems to be relevant in these transactions, rather than following its own clear and specified legal directive.”

Domains ending in .org, which is short for “organization,” tend to be nonprofit organizations, educational institutions, open-source projects and communities, though no rules exist for registering for a .org domain—unlike the .edu domain, which requires the registrant to prove it’s an accredited educational institution, such as a college.

But this works well for the .edu domain because its history is different from .org’s. In 2001, a policy was instated that only an accredited college could use the domain. Before then, stretching back to the early ‘90s, the rule was even stricter, allowing only four-year institutions to use the domain, ruling out accredited community colleges and other non-traditional institutions, such as our own coding boot camp.

So .edu has always been restricted. But imagine being a community organization—a software developers club, for example—and Ethos decided you need to be registered with the IRS as a 401c3 nonprofit corporation. You’d have to decide whether to go through the trouble of incorporating and filing an application—and paying the fees—to become a 401c3, or just let your long-held domain go.  You may have been using that domain for decades and worked hard to promote. Or new rules could limit how many subdomains you could have at your .org site. For example, WordCamp, an annual WordPress users mini-convention that happens all over the world, gives each local event a subdomain on its main site. I can attest as a volunteer organizers for my local event two years running that if we had to pay for our own domain, it would be a significant bite out of the already microscopic budget.

Tech Community Applauds Decision

Many industry professionals have applauded ICANN’s decision to turn down the .org sale, saying it would have thrown their business into uncertainty. Many rely on their .org websites as a vital part of their digital marketing strategy, and to have that in the hands of a for-profit corporation who can do with it what they want was worrisome.

Some raised concerns that Ethos Capital could raise the rates, saying most organizations with .org domains are nonprofits, community groups and NGO that don’t have a huge budget. “We were… concerned about passing on the price hikes to customers who have registered .org domains,” said Perry Toone, the head of Thexyz, an email service based in Toronto, Canada that serves many .org clients. “These are often charities or non-profit organizations. They were mostly unaware about the sale.”

He was so opposed to the .org sale, he started SaveDotOrg.org, a website dedicated to raising awareness of the potential sale. He’s relieved that the sale was rejected, but the fact that ICANN entertained the proposal, even for a few months, shook his confidence in the organization. “It is clear that ICANN is not the transparent and trustworthy organization we had hoped it would be,” he said.

One of those organizations that felt threatened by the sale was Dentaly, a free, online resource for dental care information that operates a .org domain. “Sites with .org domains are known for being reputable sources of information as they’re often used by non-profits,” said Dentaly CEO Max Harland. “If private companies started to take over all the .org addresses because non-profits and reputable, independent sites like ours were priced out, we worry what that would mean for people seeking honest information.”

Even if the cost increase were small for a single domain—such as $3—that would amount to a lot for those who own numerous, said Colin Ma, an El Segundo-based computer engineer who owns numerous .org domains, such as freestylecreative.org. “I was really hoping it wouldn’t go through. I’m glad it didn’t as I didn’t want to potentially spend hundreds of dollars in renewals for just a few .org websites,” Ma said. “Depending on the renewal difference (if any), I would strongly have to reconsider keeping some of my .org extensions.”

However, some industry pros felt a giant price hike was unlikely, since even a small increase of $2–3 would likely create a lot of additional revenue for the company. “When I first read about the potential acquisition I was apprehensive. People were talking about how prices for .org domains were going to go up and so you should lock in the current price for five years of registration,” said Michael Alexis, CEO of teambuilding.com. “With the number of .org domains registered in the millions, even a ‘raise the price’ strategy of $2 or $3 for the annual renewal would yield significant gains for the stakeholders. This amount would not affect our organization.”

Fast Facts

  • 10.5 million domain names .org domain names are registered.
  • The Internet Society (ISOC) founded PIR in 2003 to handle the .org domain.
  • The Internet Assigned Numbers Authority (IANA) handled this duty under a government contract before PIR.

Background

  • Ethos Capital describes itself as a new investment company rooted in “the belief that prosperity can be built and shared with all the stakeholders in our investment ecosystem.” It states on its website that it aims to help companies grow by employing new technologies. It is also committed to operating ethically, responsibly and in the best interests of all stakeholders and the broader community. It’s corporate values include authentic relationships, honored commitments, intellectual honesty always with humility and mutual respect.
  • Internet Assigned Numbers Authority (IANA), which currently maintained the .org domain before PIR, is still around. It’s responsible for coordinating some of the key elements that keep the Internet running smoothly. According to its website, “Whilst the Internet is renowned for being a worldwide network free from central coordination, there is a technical need for some key parts of the Internet to be globally coordinated, and this coordination role is undertaken by us. Specifically, we allocate and maintain unique codes and numbering systems that are used in the technical standards (“protocols”) that drive the Internet.” It is one of the oldest institutions involved in running the internet, dating back to the 1970s. Today, it provides these services through Public Technical Identifiers (PTI), an affiliate of ICANN.
  • ICANN‘s mission is to “ensure the stable and secure operation of the Internet’s unique identifier systems,” according to its mission statement. This includes assigning names in the DNS, maintaining the security and stability of the DNS and collaborating with other organizations to provide the registry service needed to keep the Internet functioning. Its mission statement forbids ICANN to regulate service to the Internet, its unique identifiers or its content. Among its values is to, “respect the creativity, innovation, and flow of information made possible by the Internet by limiting ICANN’s activities to matters that are within ICANN’s Mission and require or significantly benefit from global coordination.”
  • PIR us a Reston, Virginia-based not-for-profit entity that serves the public’s interest online, the organization states on its website. “Our globally diverse team is committed to providing a stable online platform to enable people to do good things. It was created by the Internet Society (ISOC), originally to manage the .ORG domain.
  • The Internet Society supports the development of the Internet “as a global technical infrastructure, a resource to enrich people’s lives, and a force for good in society,” its mission statement says. “Our work aligns with our goals for the Internet to be open, globally-connected, secure, and trustworthy. We seek collaboration with all who share these goals.” The organization’s work focuses on supporting the communities that make the Internet work, promoting the development of infrastructure and open standards and advocating for policy that aligns with the organization’s vision of the Internet.

Social Media Comments Before the Decision to Not Sell

  • “The governance trends at #ICANN are worrisome: backroom deals with big companies and disregard for its public mission. #ICANN needs an intervention to help get it back on track.”—Nat Cohen @domainarts, Owner of Telepathy, Inc. and ICA Board member
  • “#ICANN’s Open Data Initiative claims to allow ‘anyone to find, search, and download data in a variety of ways, supporting as many open standards as possible.’ Yet, why is ICANN staff refusing to allow public comments to be downloaded? #transparency”—George Kirikos @GeorgeKirikos, President of Leap of Faith Financial Services Inc.
  • “#ICANN (= ICANN’t) is an ethically and morally corrupt organization which has damaged the internet with it’s greed, ineptness and corruption to serve it’s own needs.”—RKB @RealDomainBoss, Engineer; Founder, President & CEO of http://DomainBoss.com
  • I’m actually surprised the #ICANN board rejected the transfer, and hope it is a positive sign that they are going to hold their staff to be more responsible and transparent. Now let’s see if ISOC tries another sneaky move without informing their members.”—Jeff Moss @thedarktangent, Commissioner of GCSC. Founder of Black Hat & DEF CON. Member of Atlantic Council, CFR, DHS HSAC.
  • “Good news at last as .org will stay under #ICANN at least for now under current #Internet governance.”—@Cybrsalon
  • “Wow..big. ‘Private Equity company acquires .Org #registry’ End of .org #domains? Put a stop to this. Being contested.”—Gregg Amos @gamos, Help Desk @Limio_Net.
  • “What’s the harm in this $1.135 billion deal? In short, it would give #EthosCapital the power to censor the speech of nonprofit organizations (#NGO’s) to advance commercial interests, and to extract ever-growing monopoly rents from those same nonprofits.”—hewiak @hewiak
  • If this acquisition was done by an organization which had any even a tiny reputation for investing in open communities, might be received better. Has #EthosCapital ever published open code? Financial engineering firm finding rare “#smartbeta” unregulated monopoly profit.”—Ben Creasy @jcrben