Private equity firm won't get to control the .org domain after all

Remember last year when it looked like a private equity firm would gain control of .org domain registration, making non-profits fear fees would skyrocket? Yeah, that's not happening anymore.

In a Tuesday blog post, Internet Corporation for Assigned Names and Numbers (ICANN) board chair Maarten Botterman announced it was rejecting the sale of non-profit .org registry Public Interest Registry (PIR) to private equity firm Ethos Capital.

"After completing its evaluation, the ICANN Board finds that the public interest is better served in withholding consent as a result of various factors that create unacceptable uncertainty over the future of the third largest [generic top-level domain] registry," wrote Botterman.

The decision was made after a lengthy investigation spanning several months. One of the reasons given for refusing to approve the sale was that it was 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."

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Here's the quick and dirty breakdown. In late 2019, non-profit organisation Internet Society (ISOC) announced it had agreed to sell non-profit PIR to private equity firm Ethos Capital for $1.135 billion. ISOC had created PIR to manage the registration of .org domains, which meant that the authority to grant these domains would be controlled by Ethos Capital if the sale went through.

Many other non-profit organisations were understandably upset by this, fearing Ethos Capital would raise registration fees and make it more difficult for them to operate. The .org domain brings with it a certain legitimacy and trust that is invaluable to such organisations. Having to pay increased fees or lose their domain would be a significant blow for the sector, particularly as it isn't exactly flush with cash.

Numerous non-profit organisations petitioned ISOC to stop the sale, but it seemed destined to go ahead.

Hopes faded even further after ICANN, the non-profit responsible for managing the domain name system, seemed to indicate it would not step in. Under PIR's Registry Agreements, ICANN could require PIR obtain its approval for a change in control, though it could not unreasonably withhold said approval.

Fortunately, ICANN has since concluded that refusing to allow the transfer is not only reasonable, but "the right thing to do."

"The entire Board stands by this decision," wrote Botterman. "After thorough due diligence and robust discussion, we concluded that this is the right decision to take."

Ethos Capital, ISOC, and PIR have expressed disappointment with ICANN's decision, accusing it of setting "a dangerous precedent with broad industry implications," "[overstepping] its purview" and "[acting] as a regulatory body it was never meant to be."

In contrast, non-profit organisations are thrilled. Even so, they're conscious this isn't the end of the story.

"ICANN must now open a public process for bids to find a new home for the .Org domain," said non-profit NTEN and Electronic Frontier Foundation in a joint statement on Thursday. NTEN had been running the campaign to prevent the sale, garnering the support of 871 organisations.

"The .Org domain, the third-largest top-level domain, needs a secure and reliable steward that can prove it has the public and nonprofit sector’s interests at its core."