Risk & Compliance

ICANN Rejects Move to Privatize .Org Domain

The controversial $1 billion deal would saddle the .org registry with $360 million in debt.

The Internet Corporation for Assigned Names and Numbers (ICANN), the non-profit organization that oversees the internet’s domain name system, has blocked a proposal to sell the .org domain to private equity firm Ethos Capital for more than $1 billion.

The .org domain registry is run by the Public Interest Registry (PIR), a non-profit subsidiary of Internet Society, another non-profit. Ethos Capital was proposing to buy the PIR from the Internet Society. Under the terms of the deal, the PIR would have taken on $360 million in debt to help finance the transaction.

ICANN said the proposed deal would have constituted a fundamental change of control that converted a viable non-profit entity into a for-profit entity with new debt and untested accountability measures.

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ICANN said the proposal, which it received last November, prompted significant public backlash. It also cited the proposal to take on debt obligations to finance a leveraged buyout as relevant to its decision to oppose the deal.

In a resolution, the board of directors of ICANN said its opposition was reasonable and in the public interest. “ICANN is being asked to agree to contract with a wholly different form of entity; instead of contracting with the mission-based not-for-profit that has responsibly operated the .org registry for nearly 20 years, with the protections for its own community embedded in its mission and status as a not-for-profit entity,” the group said.

In mid-April, in a letter to ICANN, California Attorney General Xavier Becerra said there was “mounting concern” that ICANN was not responsive to its stakeholders and cited Ethos Capital’s lack of transparency.

ICANN said it received letters from at least 30 groups opposing the deal but “virtually no counterbalancing support except from the parties involved in the transaction and their advisors.”

“We are disappointed that ICANN has acted as a regulatory body it was never meant to be, as laid out in Article 1 of its bylaws,” the Internet Society said in a statement. “The outcome seems inconsistent with prior decisions made by ICANN in similar cases. We stand by our decision in favor of the transaction to unlock the full potential of the Internet Society, PIR, .ORG community, and ultimately the internet.”