$1.1B Sale of .ORG to Private Equity Firm Ethos Capital — Rejected

While many nonprofits are fighting to survive amidst an economic crisis, they all have a reason to celebrate. ICANN, the organization that oversees internet domain names, has officially rejected Ethos Capital’s proposal to take control of the .ORG domain.

Among the many various factors that drove ICANN’s final decision, according to a statement issued by ICANN, were a change from the fundamental public interest nature of Public Interest Registry to an entity that is bound to serve the interests of its corporate stakeholders, ICANN being asked to agree to contract with a whole different entity and the $360 million debt instrument forces PIR to service that debt and provide returns to its stakeholders and raises question about how .ORG registrants will be protected.

“The entire board stands by this decision. After thorough due diligence and robust discussion, we concluded that this is the right decision to take. While recognizing the disappointment for some, we call upon all involved to find a healthy way forward, with a keen eye to provide the best possible support to the .ORG community,” the statement said.

In a joint statement from NTEN and EFF, organizations that spearheaded SaveDotOrg, which received support of nearly 900 organizations and 64,000 individuals: “The need for reliability and security of the .ORG domain is as high as it ever has been, and the proposal to convert PIR from a nonprofit to a for-profit entity, and then sell it to private equity firm Ethos Capital, would have jeopardized both.”

And of course, Ethos Capital, the private equity firm that wanted to acquire .ORG, is not thrilled with ICANN’s decision to block the sale, and even feels like ICANN overstepped its authority:

“This decision will suffocate innovation and deter future investment in the domain industry. ICANN has empowered itself to extend its authority into areas that fall well outside of its legal mandate in acting as a regulatory body. Today’s decision also creates an uncertain and unpredictable business environment, where the enforceability and value of the ICANN contract itself may be called into question now that the rules of transferring ownership are open to influence by outside interests. Ethos is evaluating its options at this time.”

While this is a victory for nonprofits today, this seems like it is a continuing battle for control over the .ORG domain. According to SaveDotOrg, the next step is for ICANN to open a public bidding process to find a new home for .ORG, which needs to be secure and reliable, and, most importantly, have the well-being and interests of nonprofits top of mind.