Dot-org, or “.org," is one of the oldest and largest domains on the internet — a digital home for more than 10.5 million websites, many of them nonprofits.
The group that operates this massive registry, Public Interest Registry, is itself a Pennsylvania charitable organization, and had been up for sale for months to a private equity firm. Hundreds of groups, including several Pennsylvania nonprofits, opposed the deal through a petition called “SaveDotOrg,” saying they were alarmed about the possibilities of increased prices and other ways new owners could seek to turn a profit.
Those groups got their way late Thursday, when the board of the Internet Corporation for Assigned Names and Numbers (ICANN), which oversees the domain name system, rejected the $1.1 billion proposal.
ICANN’s board said Public Interest Registry “has enjoyed a close and responsible relationship with its community for nearly 20 years,” and that the board could not allow it to be sold to “an untested private equity firm.”
That firm, Ethos Capital, was founded last year by Erik Brooks, who’d spent two decades at another private equity outfit. The announcement last November that Ethos was planning to acquire Public Interest Registry took many in the internet community by surprise. It prompted an outpouring of questions from digital rights advocates, public officials, and ICANN about the financials and the investors involved in the deal, who Ethos has not named publicly, beyond saying they are based in the U.S.
Under the proposed sale to Ethos Capital, Public Interest Registry would have been converted from a nonprofit to a for-profit corporation, and taken on $360 million in debt. ICANN’s board on Thursday said there was too much uncertainty about whether the registry could repay that amount, potentially jeopardizing its “long-term financial stability.”
To address concerns about accountability, Ethos and the registry had put forward a number of so-called “Public Interest Commitments,” which they said would be legally binding through the registry’s contract with ICANN.
But ICANN’s board said it should not have to serve as a backstop to keep the registry accountable to its community. The board also cast doubt on whether members of a proposed stewardship council could be “truly independent” of the new company’s financial interests.
California’s Attorney General, the board noted, also said the debt burden and other aspects of the sale raised “serious concerns" for the nonprofit community, and had asked ICANN to block the proposal.
Oversight by Pennsylvania Attorney General Josh Shapiro, who has jurisdiction over state charities, was another factor in the board’s decision. To become a for-profit, Public Interest Registry would need to get approval from the Pennsylvania Orphans’ Court, and Shapiro’s office has the power to review and weigh in on such a request.
ICANN’s board had a May 4 deadline to make its own decision, and said the Pennsylvania process wouldn’t be finished by then — so it still does not know Shapiro’s view on the matter, or whether the court will authorize the change.
The “lack of approval from the Pennsylvania authorities has remained an area of concern," the board said in its decision.
Shapiro’s office did not immediately respond to a request for comment Friday.
In a statement, Ethos Capital said the decision by ICANN “sets a dangerous precedent,” and opens the door for the organization to “unilaterally reject future transfer requests based on agenda-driven pressure by outside parties.”
The firm is “evaluating its options at this time,” the statement said.
Public Interest Registry called the decision disappointing, but said the organization is as “committed as ever” to its mission of running the dot-org registry. While the nonprofit is incorporated in Pennsylvania, it operates out of headquarters in Reston, Va.
Groups such as the Pennsylvania Child Care Association, Pennsylvania Interfaith Power & Light, and the Pennsylvania Association of Nonprofit Organizations, which has more than 1,000 members, had signed the “SaveDotOrg” petition, along with Girl Scouts of the USA, the YMCA, and the American Red Cross.
“The collective voices made a difference,” two organizers for the petition, NTEN and the Electronic Frontier Foundation, said in a joint statement, calling for a competitive “public process for bids to find a new home for the .org domain.”