Yesterday the ICANN Board refused to approve the sale of the .ORG registry to Ethos Capital. This is being hailed as a great victory for the public interest by some, and as a lamentable “failure to follow ICANN’s bylaws, processes, and contracts” by the parties to the proposed sale. In fact, it is neither. The decision merely keeps in place a flawed status quo, and the decision was made within reasonable parameters of ICANN’s authority under its Registry Agreement. But here’s the real takeaway: the resulting situation is not any better, and possibly a bit worse, that what could have happened if the deal had gone through. There is nothing to celebrate here.

The SaveDotOrgy

Let’s begin with a dissection of the forces opposed to the sale. The anti-ORG sale movement, led by Access Now and EFF, was predicated on the myth that the existing ORG registry manager and existing ORG policies were a civil society nirvana. The intrusion of the profit motive, they claimed, would push us out of this Garden of Eden and into the hell of rapacious capitalism.

This was ideological nonsense. As we will prove below, every fear about ORG’s governance that was expressed in relation to the sale was already happening under the status quo and is likely to continue now that the sale has been blocked. Aside from that, the control of a domain name registry by a for-profit company was never the threat to civil society’s Internet presence that it was made out to be. Nonprofits rely on commercial firms and markets for most of their Internet access capabilities. Worldwide, the existence of open competitive markets has done more to support, strengthen and expand access to information and communications than any nonprofit or government program. Nevertheless, this “nonprofit Nirvana” myth garnered the support of many civil society groups, who knew little about the situation and were frightened by lurid representations about the risks of the transfer.

While some shady aspects of the Ethos Capital acquisition did raise questions, there was the possibility that ICANN’s review process and a new “Public Interest Commitment” (PIC) attachment to the ORG Registry Agreement could improve the situation. As I will explain later, PIR and Ethos Capital blew that opportunity. Worse, Access, EFF and other opponents of the sale actively opposed making those improvements.

Ironically, one of the chief supporters of the stop the deal movement were organized bands of for-profit businesspeople known as “domainers.” Domainers register thousands of ORG domains and hope to resell them at a higher price in the secondary market. Far from being morally outraged advocates of nonprofitness, the domainers just didn’t want prices on their inventory to increase, and joined in the anti-deal chorus. The SaveDotOrg people knew this, and didn’t care. Even worse, the SavedotOrg groups allied themselves with parties who simply wanted ICANN to take away the domain from the Internet Society and give it to them, so that they could profit from the nominal nonprofit, what might be called wannabe ISOCs. This further tarnished their reputation as guardians of the public interest.

As negotiations proceeded it became clear that Access and EFF wanted to stop the sale for its own sake and did not really care about improvements in the governance of ORG. Stopping the sale became a scalp they wanted to put on their belt, regardless of the consequences. And as their opposition gained momentum they started grabbing for political influence wherever they could find it. Since the anti-ORG sale movement was centered in the United States, this meant bringing to bear pressure from the US government and ultimately the California Attorney General.  EFF’s headquarters is in California, so obviously his letters were responses to lobbying.

The appeal to government was a cynical ploy. For the preceding decade, intellectual property and other big business interests – precisely the people EFF and Access Now say they oppose – would turn to the US Congress and US politicians whenever ICANN’s process was about to produce a policy they didn’t like. Instead of good faith participation in the transnational, bottom-up multistakeholder process, they would leverage their connections to American politicians to influence the outcome. EFF and Access played the same game. Indeed, EFF’s Mitch Stolz reached the heights of Orwellian newspeak when he claimed in a blog post that ICANN could demonstrate its independence of governments by doing what the government was telling it to do.

Did the end justify the means?

Political opportunism of this sort might be justified if the outcome was a good one. But that’s the problem. As I said before, EFF and Access made stopping the sale an end in itself. They got what they wanted. So what benefit do we have now? The answer is: absolutely nothing. Here is a quick rundown: on the left, what we have now, on the right what we would get under the PIC if the sale went through.

Price increases

The prospect of price increases was one of the main fear factors used by opponents of the sale. Did stopping the sale improve things?

Deal is stopped Deal goes through
No price caps in Registry Agreement No price caps in Registry Agreement
PIR can raise rates by any amount at will

PIR has raised rates for past 5 years

Commitment not to raise rates more than 10% for 8 years
No commitment or obligation to extend registration terms Possibility of PIR cooperation with extended registration terms

Representation of civil society in governance of ORG

How much influence does civil society have over the governance of .ORG? Here’s how it breaks down:

Deal is stopped Deal goes through
Powerless and inactive Advisory Council Org Stewardship Council with a strong charter and veto power over policies affecting free speech and privacy
Advisory Council members selected entirely by ORG management Council members selected entirely by ORG management

 

Domain name policies affecting free expression and privacy

Deal is stopped Deal goes through
ORG supported thick Whois (anti-privacy); COM did not Commitment to free speech and privacy principles in OSC charter
ORG supported IPR and other   content-based takedowns OSC policy veto

 

In each of these cases, one sees either no difference between the status quo and the Ethos Capital deal, or a slightly worse situation in the status quo. While the PIC was inadequate, many Noncommercial stakeholders involved in ICANN were puzzled at the unwillingness of the opponents of the deal to bargain for a better PIC.

The Jilted Sale Parties

As for Internet Society (ISOC) and Ethos Capital, both must be smarting from this rejection. But it is hard to feel much sympathy for them. ISOC was openly monetizing an asset that was given to it for free due to its privileged relationship to ICANN in the early days, under the pretense of being a steward for noncommercial registrants. For those of us not blinded by anti-commercial ideology, ISOC’s propensity to monetize the asset is unsurprising – nonprofit legal status has never meant that organizations are magically shorn of all economic incentives – but ISOC could have, and should have, tried to do a better job of protecting the way ORG was governed after the sale. Its contract with Ethos should have contained the kind of commitments we had to retrofit onto the deal as part of the ICANN review process. Indeed, the public interest groups celebrating the negation of the sale need to ask themselves what is so great about leaving ORG in the hands of an owner (ISOC) that was willing to profit from a sale. As for PIR and Ethos Capital, the grudging way in which they made PIC bargains seems to have blown up in their face. In particular, their unwillingness to offer meaningful forms of representation to independent noncommercial groups on the Org Stewardship Council was a really boneheaded move. What would it have cost them, really, to have the OSC members selected by the community rather than themselves? In ICANN’s decision, the lack of meaningful representation on the OSC is cited as a criterion for denying the sale.

Looking ahead

Followers of the Internet Governance Project know that we were very engaged in the debate over the sale, both in our capacity as a .ORG domain holder, as members of the Noncommercial Stakeholder Group and as independent, academic-based policy analysts. We are neither jubilant about this decision nor opposed to it. Our bottom line take is that the status quo is nothing to celebrate and we should have used the sale to get stronger commitments from the ORG registry. We didn’t get them, so the failure of the deal is nothing to shed tears about, either. Still, the opportunity to make important improvements has been lost, and aggressive actions by public interest groups is partly responsible. Contractually, there is no ability to do an arbitrary re-bid, so opponents of the sale need to stop pretending that that we can suddenly decide to re-assign .ORG to some ideal candidate.

4 thoughts on “No real winners in dot ORG decision

  1. What is lost? The no-brainer move now for civil society is to nudge ISOC and PIR to take moving forward with the good from the bad – the .Org Stewardship Council and some other bits of PIC – as price for getting the target off ISOC’s back from this fiasco.

    1. What has been lost is obvious: the opportunity to negotiate a meaningful PIC. Your “no-brainer” suggestion seems to be totally out of touch with reality. We couldn’t get a decent oversight Council out of PIR/Ethos when the entire fate of the sale was at stake. How are we going to get a better PIC from ISOC/PIR now, when they have no incentive to bargain at all? The target has already been taken off of ISOC’s back when ICANN killed the deal. It’s over. Nothing is going to happen now until the next RA expires. When that happens 7 years down the road there will be a presumed renewal unless ISOC/PIR does something illegal or in breach of its contract, which they won’t do. ORG has been “saved” indeed. Enjoy the next seven years!

  2. The real winners are .ORG registrants and “the public interest,” defended by the California State Attorney General, acting in accordance with California statutory and common law. Obviously this has come as a shock to you, ICANN Org and its “community” dominated by lobbyists, lawyers, and special interests, as well as the Internet Society, PIR, and especially Ethos Capital, whose management and “advisors” included so many former members of ICANN Org management. What you call the “flawed status quo” is preferable to the Ethos Capital “private equity deal.” But there isn’t a “status quo” — PIR and the Internet Society have lost so much in the way of trust and respect by chasing this deal, they may NEVER recover their former status unless there is wholesale change in leadership and “corporate culture” — ICANN is also “now on notice” that the “public interest” includes the stakeholder interests of domain name registrants, a novel concept within ICANN Org.

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