Posted on 5/6/2020 6:29:09 PM By Charlie Giger

On May 1, 2020, Internet Corporation for Assigned Names and Numbers (ICANN) announced its decision to block the proposed sale of .ORG to Ethos Capital, a private equity firm.[i] ICANN is a nonprofit organization that is responsible for ensuring the stability and security of the Internet.[ii]
 
In November 2019, the Internet Society, which created Public Interest Registry (PIR)  to maintain the .ORG top-level domain in 2002, announced that Ethos Capital would acquire PIR and its assets.[iii] The Internet Society claimed that the acquisition would “enable PIR to continue expanding its mission and important work under new ownership — including its goal of keeping .ORG accessible and reasonably priced — while further strengthening and deepening its commitment to the .ORG Community.”[iv]
 
The Internet Society’s announcement, however, was met with resistance. According to savedotorg.org, “871 organizations and 27,044 people oppose[d] the sale of .ORG.”[v] The savedotorg.org website features a lengthy list of organizations that joined the petition. In addition, the proposed sale caught the attention of several U.S. lawmakers who raised concerns over the sale.[vi]
 
Prior to the transaction’s closing, PIR submitted to ICANN a notice of change of control and entity conversion. Under the gTLD registry agreement, ICANN had until January 19, 2020, to respond to PIR’s request; but, after several extensions, ICANN’s deadline to provide or withhold consent was extended until May 4, 2020.[vii]
 
After completing its assessment, ICANN found “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.”[viii] ICANN cited several factors that leaned in favor of withholding consent, including the uncertainty of “how the .ORG registrants will be protected or will benefit from this conversion.”[ix] Another concern was that by losing its not-for-profit status, the entity would be burdened with “$360 million in debt in the midst of current and likely ongoing economic uncertainty.”[x]
 
For now, ICANN's decision will keep the status quo for .ORG registrants. But this may not be the end of the story. In closing, ICANN provided: “If PIR is able to provide additional information that resolves the concerns raised by the Board, PIR remains able to re-submit or initiate a new Change of Control Request.”[xi]
 
 
 
 
 
[i] ICANN Board Withholds Consent for a Change of Control of the Public Interest Registry (PIR), available at https://www.icann.org/news/blog/icann-board-withholds-consent-for-a-change-of-control-of-the-public-interest-registry-pir (last visited May 6, 2020).
[ii] Acronyms and Terms, available at https://www.icann.org/icann-acronyms-and-terms/en/G0110 (last visited May 6, 2020).
[iii] The Internet Society & Public Interest Registry: a New Era of Opportunity, available at https://thenew.org/the-internet-society-public-interest-registry-a-new-era-of-opportunity/ (last visited May 6, 2020).
[iv] Id.
[v] Joint Statement from NTEN and EFF, available at https://savedotorg.org/ (last visited May 6, 2020).
[vi] Correspondence to ICANN (Mar. 18, 2020), available at https://www.icann.org/en/system/files/correspondence/warren-et-al-to-marby-et-al-18mar20-en.pdf; see also Top Lawmakers Warn Against Private Equity Firm’s .Org Takeover, available at https://gizmodo.com/top-lawmakers-warn-against-private-equity-firms-org-ta-1840612552 (Dated Dec. 23, 2019).
[vii] Approved Board Resolutions | Special Meeting of the ICANN Board (Apr. 30, 2020), available at https://www.icann.org/resources/board-material/resolutions-2020-04-30-en.
[viii] ICANN Board Withholds Consent for a Change of Control of the Public Interest Registry (PIR), available at https://www.icann.org/news/blog/icann-board-withholds-consent-for-a-change-of-control-of-the-public-interest-registry-pir (last visited May 6, 2020).
[ix] Id.
[x] Id.
[xi] Approved Board Resolutions | Special Meeting of the ICANN Board (Apr. 30, 2020), available at https://www.icann.org/resources/board-material/resolutions-2020-04-30-en.
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