ICANN delays decision on sale of .ORG Registry to private equity firm — again

Back in Jan­u­ary, we report­ed that the Inter­net Cor­po­ra­tion for Assigned Names and Num­bers (ICANN) was con­sid­er­ing allow­ing the Inter­net Soci­ety (ISOC) to sell the .ORG reg­istry to Ethos Cap­i­tal, a pri­vate equi­ty firm, for $1.13 billion.

ICANN is a Cal­i­for­nia-based mul­ti-stake­hold­er group that, among oth­er things, over­sees the many com­pa­nies that man­age reg­istries of domains.

ICANN has yet to reach a final deter­mi­na­tion as to whether or not ISOC should be allowed to sell the .ORG reg­istry to Ethos. And while it said it was going to make a deci­sion this month, it is once again punt­ing to a lat­er date, thanks to a strong­ly word­ed let­ter from California’s attor­ney gen­er­al Xavier Becer­ra.

In the let­ter, addressed to ICANN’s board chair and the corporation’s Pres­i­dent and CEO, Becer­ra explained that his office has been keep­ing an eye on ICANN and has grave con­cerns about the trans­fer of the .ORG reg­istry to Ethos Capital.

The let­ter stern­ly remind­ed ICANN that it needs to act in the best inter­est of every­one, not just those who stand to make a prof­it from this pro­posed transaction.

Becer­ra point­ed out that ICANN’s arti­cles of incor­po­ra­tion clear­ly state that ICANN is “not orga­nized for the pri­vate gain of any per­son […] rec­og­niz­ing the fact that the Inter­net is an inter­na­tion­al net­work of net­works, owned by no sin­gle nation, indi­vid­ual or organization.”

Becer­ra also not­ed that there is a lack of trans­paren­cy not just sur­round­ing what Ethos Cap­i­tal plans to do with the acqui­si­tion, but also about the invest­ment firm itself. “PIR, the non­prof­it arm of ICANN, has duti­ful­ly man­aged the .ORG reg­istry for more than six­teen years,” the let­ter states.

“Per­mit­ting Ethos Cap­i­tal or any oth­er busi­ness to take con­trol of the reg­istry, with­out clar­i­ty about the poten­tial changes, pos­es mean­ing­ful con­cerns to the non­prof­it community.”

The ICANN board sub­se­quent­ly put off the final deci­sion about the sale until May 4th, the fourth time it has delayed its deci­sion. It’s report­ed that the board received AG Becerra’s let­ter just hours before this announce­ment.

The announce­ment states:

“Since Jan­u­ary, we have been pro­vid­ing infor­ma­tion and ful­ly coop­er­at­ing with the Cal­i­for­nia Attor­ney Gen­er­al’s review. We appre­ci­ate receiv­ing the Attor­ney Gen­er­al’s let­ter and are care­ful­ly review­ing and con­sid­er­ing it as part of our eval­u­a­tion of the change of con­trol and PIR’s enti­ty con­ver­sion. Through­out this process, we have lis­tened care­ful­ly to the com­mu­ni­ty, and have demand­ed more safe­guards and greater trans­paren­cy from PIR.”

ICANN sug­gest­ed that the Attor­ney General’s let­ter does not take into account recent work done by PIR to ensure that Ethos Cap­i­tal would be “respon­si­ble to the com­mu­ni­ty” in the event they acquire the .ORG registry.

Becer­ra con­tends that while PIR pur­ports to sup­port the free and open nature of the Inter­net, “its actions, from the secre­tive nature of the trans­ac­tion, to active­ly seek­ing to trans­fer the .ORG reg­istry to an unknown enti­ty, are con­trary to its mis­sion and poten­tial­ly dis­rup­tive to the same sys­tem it claims to cham­pi­on and support.”

The let­ter does not threat­en any legal action against ICANN. It ends by say­ing the  office of the Attor­ney Gen­er­al of Cal­i­for­nia will con­tin­ue to mon­i­tor the sit­u­a­tion, imply­ing that it is pre­pared to act if the sale does go forward.

“My office is com­mit­ted to pro­tect­ing Cal­i­for­ni­a’s and the pub­lic’s inter­est in a prop­er­ly func­tion­ing and acces­si­ble .ORG domain sys­tem,” it says.

“ISOC and PIR are char­i­ta­ble orga­ni­za­tions that are account­able to their com­mu­ni­ty stake­hold­ers and to the pub­lic at large. In con­trast, a pri­vate equi­ty firm is account­able only to its investors.”