A Private Equity Firm Is Blocked From Buying .Org - The New York Times
By Steve Lohr
May 1, 2020
A private equity firm will not gain control of dot-org, the digital real estate that is home to millions of nonprofits, nongovernmental organizations and community groups.
The board of the Internet Corporation for Assigned Names and Numbers, which oversees the internet naming system, decided on Thursday night to veto the sale of the rights to dot-org to Ethos Capital, which had offered more than $1 billion.
Maarten Botterman, the chair of ICANN, wrote in a blog post that after all the considerations were weighed, rejecting Ethos’s proposed bid was “reasonable, and the right thing to do.”
Ever since the planned sale was announced in November, the deal had stirred fierce opposition. Dot-org is best known as the cyber neighborhood to nonprofit organizations with civic missions like the Red Cross (redcross.org), Human Rights Watch (hrw.org) and NPR (npr.org).
To many, handing control of dot-org to a private equity firm seemed almost like heresy. The growing ranks of opponents eventually included internet pioneers, nonprofit leaders and the attorney general of California, Xavier Becerra.
The opponents raised several concerns, including the risk of steep price increases, underinvestment and censorship. Ethos Capital tried to address those worries by pledging to set up a “stewardship council” of outside experts and making “public interest commitments” to restrain price increases and not censor web content.
But critics remained unconvinced. They did not believe that a private-equity firm, driven by the need to deliver rich returns for investors, would act in the best interests of what they regard as the domain of online civic society.
In an interview on Friday, Mr. Botterman said a “convincing majority” of the 15 voting members of the board opposed the Ethos Capital bid. The overarching concern, he said, was the apparent “lack of guarantees that the spirit that was always intended for dot-org” would be preserved if the private equity firm gained control.
The Internet Society saw the sale to Ethos Capital as a way to gain an endowment to fund its operations and get out of the business of operating dot-org, which it wanted to do for some time.
In an interview this week, Andrew Sullivan, chief executive of the Internet Society, said the Ethos Capital bid was one of several proposals it had received — and one that appeared to combine people who had internet experience with the financial resources to help dot-org grow and prosper.
“We viewed it as a good transaction and that would be good for everyone,” Mr. Sullivan said.
If ICANN rejected the Ethos Capital deal, the Internet Society had no immediate backup plan, Mr. Sullivan said, adding that dot-org would be run as before. “We will not neglect dot-org,” he said.
The opposition to the Ethos Capital bid took a number of forms, including an alterative proposal made in January by a group of internet veterans and nonprofit leaders called the Cooperative Corporation of .ORG Registrants. Among the cooperative’s initial seven directors are Esther Dyson, who was the first chair of ICANN, and Mike Roberts, ICANN’s first president. The Internet Society, Mr. Sullivan said in the interview this week, has not yet had talks with the cooperative’s founders.