ICANN, the organization that oversees domain name registries, blocked the sale of the dot org domain name registry to a private equity investment company. The decision to withhold consent for the sale may have been influenced by the Office of the Attorney General of California.
The board ruled that the sale would create uncertainty and that withholding consent for the sale was the reasonable thing to do.
The Internet Corporation for Assigned Names and Numbers (ICANN) stated:
“On the whole, the ICANN Board determines that the public interest is better served in withholding consent as a result of various factors that create unacceptable uncertainty over the future of the third largest gTLD registry.”
Controversial Sale to Investment Firm
The Dot Org domain name registry is the third largest domain registry, with over ten million domains registered. The dot org domain is commonly considered as the default domain registry for non-profit organizations.
It was feared that sale to a private equity investment firm would result in an uncertain future of dot org domain registry as a fairly priced domain registry for non-profit organizations.
Many of the principals involved in the proposed sale were former executives of ICANN. That created a perception of ICANN insiders cashing in on the organization they had formerly been heads of.
Adding to the perception of something fishing going on was that the ICANN controversially agreed to lift caps on the cost of dot org domain names. The proposed sale of the dot org registry followed within months of the price cap being lifted.
California Attorney General Asserts Regulatory Power Over ICANN
The office of the California Attorney General asserted regulatory authority over ICANN because ICANN is registered as a non-profit in California.
According to the official documents:
“Because ICANN is registered as a charitable nonprofit corporation, the CA-AGO asserts regulatory power over ICANN pursuant to the California Supervision of Trustees and Fundraisers for Charitable Purposes Act.”
The California Attorney General noted the lack of support for the sale and the overwhelming disapproval by politicians and interested parties in it’s determination to urge ICANN to block the sale.
“In his authority to speak for the public interest for California, the CA-AGO determined that California’s public interest in the .ORG registry running as a home for noncommercial entities, and that the public interest would be better served by ICANN withholding approval of the change of control.
As the CA-AGO’s letter observes, his determination is buoyed by the significant opposition received from other organizations and politicians, with virtually no counterbalancing support except from the parties involved in the transaction and their advisors.”
ICANN Explains Reasons for Blocking Sale
ICANN withheld consent for the sale for a number of reasons.
Chief among the reasons to withhold consent is that the sale would change the public interest focus of the current registry to the interests of the equity investment firm.
A change from the fundamental public interest nature of PIR to an entity that is bound to serve the interests of its corporate stakeholders, and which has no meaningful plan to protect or serve the .ORG community.
ICANN also stated that the sale would end the non-profit entity that was tasked with protecting the interests of the non-profits it served:
“ICANN is being asked to agree to contract with a wholly different form of entity; instead of maintaining its contract with the mission-based, not-for-profit that has responsibly operated the .ORG registry for nearly 20 years, with the protections for its own community embedded in its mission and status as a not-for-profit entity.”
The ensuing debt called into question how the new dot org registry could continue to serve the interests of non-profits:
“The US$360 million debt instrument forces PIR to service that debt and provide returns to its shareholders, which raises further question about how the .ORG registrants will be protected or will benefit from this conversion. This is a fundamental change in financial position from a not-for-profit entity”
No doubt many non-profit organizations will be happy that the sale of the dot org registry has been stopped.
Read the official announcement here:
ICANN Board Withholds Consent for a Change of Control of the Public Interest Registry (PIR)
Read the full board resolution which includes details of the California Attorney General’s influence here:
Approved Board Resolutions | Special Meeting of the ICANN Board