Sale of .org domain registry delayed by California attorney general

The .org domain takeover has been delayed, at least for now.

California Attorney General Xavier Becerra sent a letter to the Internet Corporation for Assigned Names and Numbers (ICANN) demanding more information about the private equity takeover of the .org domain registry. The attorney general is seeking answers to 35 questions concerning the sale as well as documents sent between ICANN, private equity firm Ethos Capital, and Public Interest Registry (PIR), which manages the .org domain.

Ethos Capital disclosed last year that it was acquiring PIR from its non-profit parent organization, the Internet Society, for $1.135 billion.

ICANN, the non-profit organization that oversees domain names, disclosed the letter on its website along with its own correspondence with PIR, informing it of the development. Previously, ICANN had until Feb. 17 to approve or deny the sale. According to ICANN, as a result of the California AG’s letter, it’s seeking to delay this deadline until April 20.

ICANN says it's "fully cooperating" with the request. In its letter to PIR, ICANN gives a heads up that it will be providing the attorney general "confidential material" to comply with the AG's demands. As ICANN's letter states, it has terms in its contract with PIR which forbid the organization from disclosing information that the registry deems confidential unless required by law. ICANN clearly views the AG's letter as applicable.

It’s a stunning development that certainly vindicates the concerns of non-profits, internet activists, and domain name holders.

Many of the attorney general’s questions revolve around the removal of the long-standing price caps in ICANN’s most recent contract renewal with PIR. The price caps on .org domains allowed the registry raise registration prices no more than 10 percent each year. Without those price caps, the registry could raise pricing for registration and renewals as much as it would like. In addition, it could also add new pricing structures, such as deeming certain domains as "premium" and charging whatever it would like for those domains.

Not long after ICANN’s price cap removal gave the registry complete control of .org domain pricing, Ethos Capital announced its acquisition of the registry. Many critics of the sale were concerned with the timing of these developments. Non-profit organizations, which previously galvanized to try and stop the price cap removal in the first place, worried that the private equity firm would raise .org prices in order to quickly recoup its investment.

ICANN previously said that the organization was “powerless” to do anything about the sale of the .org registry. However, ICANN’s tune quickly changed as news spread of the private equity takeover. An ICANN board member told internet activists, who recently protested outside of ICANN’s LA offices, that the organization was taking the sale “very seriously.”

There are currently more than 11.5 million registered .org domain names. Registrants pay a yearly fee to renew their domain registrations. PIR currently generates around $100 million a year selling .org domain names to registrars, such as Namecheap and Godaddy, for just under $10 per year.

The AG’s office oversees nonprofits and charitable organizations in the state of California. Becerra has cracked down on nonprofits that break the law.

Whether the acquisition is stopped remains to be seen. It all depends on what the California attorney general finds in his investigation.