ICANN Rejects $1.1 Billion Sale of .ORG Registry to Private Firm

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ICANN (Internet Corp for Assigned Names and Numbers) has rejected the proposed sale of the non-profit .org registry to a private equity firm Ethos Capital. After massive public outcry, the non-profit body that oversees web addresses announced in a statement that it has vetoed the $1.1 billion deal that would have transferred the control of the .org domains to Ethos.

The plan was initially announced in November by the Internet Society to sell the Public Interest Registry (PIR) to a newly formed Ethos Capital, and received severe backlash from over 10 million .org domain name owners, along with activists and government officials.

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ICANN says the sale would have served the interests of corporate stakeholders, not the .ORG community

"After completing extensive due diligence, the ICANN Board finds that withholding consent of the transfer of PIR from the Internet Society (ISOC) to Ethos Capital is reasonable, and the right thing to do," the agency said in its announcement. It added:

On 13 November 2019, PIR announced that ISOC, its parent organization, had reached an agreement with Ethos Capital, under which Ethos Capital would acquire PIR and all of its assets from ISOC. Under the agreement, PIR would also be converted from a Pennsylvania not-for-profit corporation to a for-profit Pennsylvania limited liability company. ISOC created and agreed to the transaction details that are under review.

On 14 November 2019, PIR formally submitted to ICANN a "Notice of Indirect Change of Control and Entity Conversion" in advance of closing the proposed transaction between Ethos Capital and ISOC. Since 2003, PIR has operated the .ORG generic top-level domain (gTLD) as a not-for-profit organization, as well as six other gTLDs. Per the gTLD Registry Agreements, ICANN must either approve or withhold consent of a proposed change of control, the deadline for which is 4 May 2020.

ICANN said it considered a number of factors, including the details of the proposed transaction, financing, funding sources of Ethos Capital, the parties involved, the role of the Pennsylvania authorities, and how the new for-profit PIR under the control of Ethos Capital would be responsive to the needs of the non-commercial community.

"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 gTLD registry," the statement reads.

It also called into question why PIR needed to become a for-profit entity to "pursue new business initiatives," adding that PIR would have been "bound to serve the interests of its corporate stakeholders" and not the .org community. ICANN was itself under pressure as the California attorney general Xavier Becerra had launched an investigation into the body's role in approving the transfer of the .org Registry Agreement from the non-profit PIR to the for-profit Ethos.

The Electronic Frontiers Foundation has called ICANN's decision of rejecting the transfer of PIR to Ethos a "stunning victory" for non-profit entities around the world.

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