UPDATE: (1 May, 2020) Following widespread community calls, ICANN’s board voted to reject the proposed sale of the .ORG domain to private equity firm Ethos Capital.
The .ORG top-level domain is the foundation on the internet for civil society, open source development, healthcare providers, crowd-sourced encyclopedias, and many other mission-driven communities. All across the .ORG community, we’ve banded together to save our online home since we found out last November that the Internet Society (ISOC) had struck a deal with private equity firm Ethos Capital to sell control of .ORG for more than a billion dollars.
Our advocacy has won delays, but now it’s decision time: as it stands now, ICANN has until Monday, April 20, to decide whether it will allow Public Interest Registry (PIR) — which manages .ORG — to change hands from the non-profit ISOC to Ethos. They are now asking for feedback in a ridiculously short comment period, open through today.
Our comments, in short: this deal always smelled fishy, and now it stinks. ICANN needs to send it back to the kitchen – and call the health inspector to oversee the cooks. We’ve outlined our recommendations to ICANN for next steps below.
See this post for a more detailed explanation of how ISOC, PIR, and ICANN are each involved in this process.
This deal cannot be trusted
Even under the best of circumstances, there are reasons to doubt whether a private owner, responsible above all to profits and shareholders, can be trusted to safeguard .ORG and those who rely on it. And these have been far from the best of circumstances.
Self-dealing
This story circles around former ICANN CEO Fadi Chehadé, who has been the hub of a turning wheel of personalities cycling through ICANN, domain registries like PIR, and private equity investing in the sector. After finishing his term as ICANN CEO in 2016, Chehadé joined private equity firm Abry Partners as a senior advisor. He led the firm’s acquisition of Donuts, a registry managing 240 upcoming top-level domains, for $150 million in September 2018. By December 2018, Donuts co-founder Jon Nevett took over as CEO at PIR.
In June 2019, ICANN approved changes to PIR’s Registry Agreement — the contract with ICANN granting them authority to oversee .ORG and setting out the rules for how it’s managed. The changes removed price caps that had been in place since PIR took control of .ORG in 2003, despite overwhelming opposition from civil society and nearly unanimous disapproval in ICANN’s public comment process (3,000 against and 6 in favor, to be exact).
Just one day after ICANN lifted the price cap, ethoscapital.org was registered under Chehadé’s name, and Ethos Capital, LLC was formed in Delaware shortly after. Ethos Capital in its current form emerged several months later, with Erik Brooks (managing partner at Abry during the Donuts acquisition) as CEO and Nora Abusitta-Ouri (former senior vice president at ICANN under Chehadé) as the only other named officer. ISOC announced it had agreed to sell .ORG to Ethos Capital for $1.1 billion in November.
No transparency
ISOC, PIR, and Ethos negotiated the sale completely in the dark, without any public consultation. After they announced the sale, thousands of civil society organizations, individual ISOC chapters, governments, and other concerned stakeholders around the world overwhelmingly spoke out against the deal and demanded a more transparent process to determine .ORG’s future.
Since then, Ethos has attempted to build up appearances of community engagement, but these empty processes have left many feeling even more frustrated. Their webinar series did not allow anyone outside of Ethos or PIR’s team to actually speak, and questions submitted from the community were highly filtered to address only the questions that served Ethos’ agenda. At several turns, Ethos has attempted to demonstrate its responsiveness to the community by announcing new accountability measures — most notably their proposal to add Public Interest Commitments to the PIR Registry Agreement — but the measures were not developed together with the community and do not even come close to addressing the concerns community members have been expressing over the last five months. ICANN itself doubts whether the commitments are enforceable.
The brazen business executives behind Ethos even skirted questions from public authorities, including the California attorney general and U.S. senators.
To avoid a conversation about why this deal fundamentally fails to protect the interests of those who need .ORG, Ethos has consistently tried to limit any opportunities for input to comment on these very weak accountability measures, pushing an assumption that the deal will move forward regardless. This approach has made it painfully clear just how empty their assurances are that they are willing and able to effectively safeguard the public interest, now and in the future.
Insufficient accountability measures
Even if Ethos Capital were willing to put strong accountability measures in place — which, they are not — we would still need to consider the long-term impact of moving .ORG into the hands of private equity. There are many governments and private-sector actors who would be willing to pay top dollar for control over the foundation of online civic space, and it would be only a matter of time before control of the domain made its way into the wrong hands. How we manage the transition of .ORG now has severe implications down the line for freedom of expression and privacy — as well as the safety of activists, journalists, and others who speak truth to power.
Ethos’ proposals for accountability have already weakened from where they started last year. For example, they had initially proposed an indefinite commitment to limits on price increases in PIR’s corporate documents. Instead, they are now only offering to limit price increases for seven years, enforceable only through ICANN rather than through the courts.
Their proposed Public Interest Commitments (PICs) and Stewardship Council charter are full of vague language, open to manipulation and leaving lots of room to evade future accountability. Considering they have already watered down some of their initial commitments, there is not much reason to feel confident they would give these new proposals the strongest possible reading going forward. When pressed to close up the loopholes, they made only surface-level changes that did not actually address community concerns.
Even if these so-called Public Interest Commitments were improved, many, including the ICANN Board, have expressed doubts that ICANN could effectively enforce them. PICs are a relatively untested tool that themselves were not designed through any kind of community consultation. And, as we saw with the lifting of price caps in 2019, ICANN has not always been responsive to the needs of the .ORG community, and leaving them as the only avenue for holding Ethos to account does not inspire much confidence.
We provided specific feedback to ICANN on the failures of Ethos’s accountability proposals here, and the updates Ethos has since made to the language do not address any of our concerns.
What happens next?
Taking the actions outlined below are an important opportunity for ICANN to make things right and to do its part in protecting online civic space — which is already under attack all around the world.
Extend the public comment period.
If ICANN is serious about getting meaningful input from the community on the current proposal, a seven-day comment period isn’t enough. At a minimum ICANN needs to allow its standard 30-day window for comments, especially considering the additional strain civil society around the world is burdening under the ongoing COVID-19 crisis. This falls in line with guidance from the UN special rapporteur on the freedom of assembly, that “multilateral institutions should take steps to ensure civil society organizations can continue to participate in all policy decisions, including those related to the Covid-19 response, especially in the case of public-private partnerships.” That ICANN is multi-stakeholder, not multilateral (like the UN), only adds to its responsibility to meaningfully consult civil society.
Negotiate an extension with PIR and Ethos.
ICANN is rushing to get in public comments in just seven days, with only two working days to process the results ahead of their April 20th deadline for deciding .ORG’s future. Further, ICANN is still waiting for responses from Ethos to many very important questions (covering issues like PIR’s financial solvency, avenues for community input going forward, and who would actually be in control of PIR across the several holding companies involved in the transaction). Getting the information they need both from Ethos and the community is essential to the long-term sustainability of .ORG, and ICANN should insist on more time to make this decision.
Withhold consent to the transfer of control of .ORG.
Even without extended comment periods and additional information, though, ICANN already has all it needs to reject this deal. Simply put, this is an underhanded and dangerous deal that puts all of us at risk, and ICANN should stop it. After several rounds of empty concessions from Ethos, and their continued failure to produce essential information about how the deal is structured, it is very clear that there is no path to redeeming this sale.
Lead a community consultation on the future of .ORG.
ICANN should provide an inclusive, substantive, community-driven venue for discussing a viable path forward for .ORG. If ISOC no longer has an interest in being a steward for the domain, it is essential that we can collectively identify a new solution that — first and foremost — meets the needs of the .ORG community, now and in the future.
We also submitted these recommendations directly to ICANN in this letter.