A coalition of nonprofits and free-speech advocates say they are considering all options, including legal action, in their fight to halt the proposed sale of the infrastructure behind the internet’s dot-org domain to a for-profit company.
The Internet Society, a Virginia-based nonprofit, wants to sell a subsidiary, Public Interest Registry, which has managed the dot-org domain since 2002, to private-equity firm Ethos Capital for $1.1 billion.
Opponents of the sale fear it could result in skyrocketing fees for nonprofits and that the new owners could suppress content that is unfavorable to business interests.
“There are now millions of nonprofits who are effectively a captive audience for dot-org at this point,” said Mitch Stoltz, staff attorney with the Electronic Frontier Foundation.” The way dot-org is operated in the future directly affects them, which is why they need to have a say in this.”
The opposition to the proposed sale has been led by such groups as the National Council of Nonprofits, the Nonprofit Technology Enterprise Network, and the Electronic Frontier Foundation. They have been pressuring the Internet Corporation for Assigned Names and Numbers, or Icann, to delay or decline to approve the sale over concerns about possible fee increases, digital censorship, a lack of transparency surrounding the proposed sale, and the optics of a for-profit company running the digital home of nonprofits.
Icann oversees domain and IP address assignments for the entire internet, granting what are essentially franchises to organizations or companies to manage individual top-level web domains — the dot-coms, dot-orgs, and dot-govs. This week, groups concerned about the sale saw a glimmer of hope when Icann released a letter urging the parties involved in the transaction to be more transparent.
The Electronic Frontier Foundation is preparing a letter to Icann urging it to reject the deal as contrary to the public interest. “At this point, we’re really not ruling out any possible avenues for changing the course of this deal,” said Cara Gagliano, staff attorney at the Electronic Frontier Foundation.
Review Period
Ethos Capital was founded in 2019 by Erik Brooks, a veteran of the domain-registry industry. The firm has a roster of senior staffers who used to work at Icann.
Ethos first sought to buy Public Interest Registry in early September, and the planned sale was made public November 13, with Internet Society officials hoping to complete the transaction early next year.
Before being finalized, the sale has to be approved by Icann. The proposed sale is roughly halfway through a 60-day review period Icann uses to scrutinize these kinds of transactions.
The sale must also be approved by a Pennsylvania court because Public Interest Registry is registered in that state, and the transaction would convert a public charity to a for-profit asset. Gagliano said the Electronic Frontier Foundation is prepared to take action in Pennsylvania courts to “change the course” of the proposed sale.
Caught Off-Guard
NTEN CEO Amy Sample Ward says it’s crucial that the digital home of nonprofits be managed by a nonprofit to make sure charities’ needs are met.
“Promoting the noncommercial use of the internet was an inspiration for the dot-org domain,” Sample Ward says. “Instead, we’ve seen decisions made that will richly benefit a handful of individuals at the expense of nonprofits.”
The outpouring of opposition seems to have caught the parties involved in the sale by surprise.
“I expected that some people would not be pleased, but I did not expect the level of anger that people have expressed over this transaction,” says Andrew Sullivan, CEO of the Internet Society. “Clearly, there are people who believe the position of dot-org, as controlled by a nonprofit, is something that they valued in a way we did not fully take into account.”
Jon Nevett, CEO of Public Interest Registry, said Ethos is well positioned to administer the dot-org domain. Most customers won’t even notice a change, he said.
“The transition from a not-for-profit to a for-profit should be seamless to our customers and users,” says Nevett. “What the customers of dot-org really want, they want certainty. They want to make sure their domain name works, that it resolves when people go there, that it’s accessible and secure, and they want to make sure it’s operated in an ethical and legal manner. It doesn’t require a nonprofit status to do all of those things.”
However, Rick Cohen, chief operations and communications officer for the National Council of Nonprofits, is among the those who say the profit motive of a for-profit company is fundamentally at odds with the needs of dot-org domain holders. Cohen estimates there are approximately 10 million dot-org domain names each bringing in about $10 a year to Public Interest Registry.
Fears about higher fees were heightened earlier this year when Icann, in contract-renewal negotiation with Public Interest Registry, agreed to remove a 10 percent cap on annual price increases on domain renewals. Icann also agreed to changes to the process for requests to suspend a website’s domain registration. The approvals came despite a flood of opposition: Icann received 3,200 comments, the overwhelming majority opposing the changes.
No Price Increases
Cohen noted that fee increases while the 10 percent cap was in place never came close to that limit, and it has been several years since prices were increased. With the cap gone, Cohen and others are worried Ethos Capital could impose a far higher increase.
Censorship Concerns
Cohen and Gagliano say, the changes would make it easier for corporations and governments to suppress content they don’t like.
“The idea of registry operators making deals with private industry to help them take down content that they don’t like is very real,” said Gagliano. “It’s something that happens and is something that pretty much any nonprofit would have reason to be concerned about.”
Questions Unanswered
During a confrontational video conference held December 6, officials with the Council of Nonprofits and the Electronic Frontier Foundation had a chance to publicly press officials involved in the planned sale.
Brooks of Ethos Capital said the firm would create a stewardship committee to oversee Ethos’s management of the dot-org domain. Asked if Ethos Capital would apply to be a B-certified corporation, Brooks said his team was interested in the idea but was noncommittal.
He said webinars are planned to gather comments on the direction of Ethos and its policies.
“We will have to make a decision about the corporate structure before we close,” said Brooks, noting that B certification is done by a third party.
Questioners also pressed Ethos about its fee structure. Company officials said they’re in favor of maintaining the “spirit” of the 10 percent cap but stopped short of committing to it.
That hesitance was a cause for concern for Cohen, who criticized Ethos for not making a firmer commitment to address objections to the proposed deal.
“This would be some binding legal agreement to uphold some of these things,” said Cohen. “But to say, ‘We’re not sure about what corporate form,’ and ‘we think we want to do a B Corp but we’re not sure.’ With so much up in the air, we wonder if there is going to be a binding commitment.”
“There are a number of mechanisms we are currently evaluating,” said Brooks, replying to Cohen. “Give me a little more time to work on that and get some feedback from everybody.”
Michael Theis writes about data and accountability for the Chronicle, conducting surveys and reporting on fundraising, giving, salaries, taxes, and more. He recently wrote about the sharp increase in donor-advised funds and about a new ratings site that measures charity impact . He also compiled data for our November report on America’s Favorite Charities . Email Michael or follow him on Twitter .
