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As pressure builds over .org sell-off, internet governance bodies fall back into familiar pattern: Silence

Protests kick off, Vint Cerf tells folks everything's fine

One week after the news the non-profit .org internet registry was to be sold to a private equity firm, the board of the organization that has to approve the purchase met in private to discuss the situation.

Four days after that organization – ICANN – met on November 21, it has yet to say a word about what it discussed or decided.

This past weekend, the board of the organization that is selling the rights to .org, and which will likely make $1bn or more from the sale, the Internet Society, met. On both the Saturday and Sunday, the proposed sale was a key topic of conversation. It has yet to provide any details on what was discussed or decided.

The same cannot be said for those opposed to the deal.

One of the earliest indicators that the deal was going to meet a very different response from the internet community than the Internet Society (ISOC) expected came in the form of an article written by one person who has set up and run their own registry.

Co-founder of the .eco top-level domain Jacob Malthouse wrote an impassioned plea online that began, “I woke up this morning feeling a profound sense of loss.” An environmental campaigner as well as a former staffer of ICANN, Malthouse compared the sale of the .org registry to the paving over of forests.

The proudly non-profit .org registry, that had for years sold its domains for just $1 to non-profits in developing countries, is “our Yosemite,” Malthouse opined, referring to America's world-famous national park. In selling it to a for-profit private equity firm, he argued, “we’ve lost more than a digital Yosemite. We’ve lost our principles. We can do better. The millions of nonprofits who rely on .org deserve better.”

You've got mail

That sentiment was quickly echoed in the broader internet industry community, which, even in the era of Twitter, Facebook and Instagram, continues to rely on mailing lists as its main form of communication.

Both ICANN and ISOC are member-based organizations and, theoretically at least, give as an equal voice to ordinary netizens as to the corporations that make billions a year from the sale and resale of internet addresses.

The voice of those ordinary internet users was unmistakable and loud: the mailing lists were flooded with messages of surprise, frustration, and anger. For a community that is frequently criticized for moving too slowly due to its culture of debate and discussion, the news that a fundamental piece of internet infrastructure was being sold off without so much as a conversation was difficult to stomach for many.

The fact that there wasn’t a discussion outside the confines of the boards of ISOC and PIR – the outfit that manages the registry and is wholly owned by ISOC – was very deliberate, many feel. If there had been a discussion, they argue, the internet community would never have allowed it to happen.

As we reported last week, the situation is especially fraught due to two additional factors. The first is that the offer to sell the rights to .org only came about because ICANN had approved the lifting of longstanding price caps on .org domains just months earlier.

The price of .org domains has been limited to an increase of 10 per cent per year since it was first handed over to the non-profit PIR in 2003. The request to remove those price caps entirely received an extraordinary response – more than 3,200 comments in a process that rarely elicits more than 50 – and a stark 98 per cent of those comments were opposed to the idea.


And yet ICANN approved the change, along with a 10-year contract extension, in an unannounced staff decision that some called a “sham” and others claimed was a sign that the organization was subject to regulatory capture.

Then came the news that ISOC had decided to sell the registry to Ethos Capital, an unknown private equity firm that had been established only months earlier.

That is where the second factor comes in. It quickly became apparent that Ethos Capital was likely the brainchild of a former CEO of ICANN, Fadi Chehade, who had been largely responsible for pushing free-market economics into the internet registry market and now appeared to be using that knowledge to profit from one of its oldest institutions.

Ethos Capital still has not confirmed Chehade’s involvement although he was present this week at the headquarters of PIR along with the CEO of Ethos Capital, Erik Brooks, in a meet-and-greet with what will presumably be their staff if the deal goes through.

There is another similarity between Ethos Capital and the organization that Chehade used to oversee, and which remains the only thing that stands in the way of the .org sale: silence. Ethos Capital continues to refuse to say anything about its offer for .org – how much, how it will be structured, what its intent is, whether it will raise prices and, critically, where it gets its funds from.

The answer to that question – who is funding the purchase of .org? – has been a key one. And in response to repeat questions from his community, the CEO of ISOC Andrew Sullivan provided an answer on a closed ISOC members mailing list.

The response shocked as many people as the initial sale announcement: the bulk of the money would come from the investment vehicles of renowned US Republican billionaires: Perot Holdings, tied to former presidential candidate Ross Perot; FMR LLC, closely associated with the Johnson family, one of the Republican Party’s biggest backers; and Solamere Capital, tied to Republican senator Mitt Romney.

Everything must go

To some, the fact that the .org registry was being sold to the richest men in the United States who would then profit from non-profit organizations was doubly insulting.

After its board meeting ended on Sunday, ISOC published an information website about the sale on a separate website: Key Points

The site contains two pieces of information that had not previously been shared with The Register and the community: the connection between former ICANN CEO Chehade and Ethos Capital, and a support quote from ISOC president, former ICANN chair and revered internet figure Vint Cerf.

“Is Fadi Chehade involved in this transaction?” the site asked, before responding: “Fadi Chehade’s company, Chehade & Company, is an adviser to Ethos. Chehade & Company is an advisory company with clients across the technology, education and creative sectors.”

Cerf was quoted as saying: “I am looking forward to supporting Ethos Capital and PIR in any way I can as they continue to expand the utility of the .org top-level domain in creative and socially responsible ways.”

And in an attempt to ease concerns about what will happen to the .org registry, it details Ethos Capital's stated intent over the sale, which is notably lacking in detail and commitment.

Asked about possible price increases, it answers: “Ethos Capital is committed to keeping .org accessible and reasonably priced for all, in line with PIR’s longstanding, purpose-driven mission. Our plan is to live within the spirit of historic practice when it comes to pricing, which means, potentially, annual price increases of up to 10 percent on average – which today would equate to approximately $1 per year.”

Asked on the ISOC members list about the risks of .org domain holders facing domains as much as $60 a year, Cerf surprised many when he responded: “Hard to imagine that $60/year would be a deal breaker for even small non-profits.”

Trust and wealth

That comment prompted Malthouse to point out that $60 is the equivalent of two weeks’ wages in sub-Sahara Africa, where a large number of non-profits rely on their internet presence for awareness of their efforts.

Not only that but Africa is the largest growing market in the world for domain names as it gradually pulls more of its citizens online. As such, the sale of the .org registry could well push one of the most recognized addresses on the internet outside the reach of most of the continent.

Someone not happy with the internet and money

Internet world despairs as non-profit .org sold for $$$$ to private equity firm, price caps axed


As silence reigns in the companies that will decide the future of .org, its opponents have grown louder. A coalition of 27 high-profile non-profits, including the Electronic Frontier Foundation (EFF), National Council of Nonprofits, YMCA, Free Software Foundation (FSF), Girls Scouts of the USA, Internet Archive, and Wikimedia Foundation, have signed a letter to ICANN urging it to stop the sale and launched a petition site that, at the time of writing, has over 7,000 supporters,

The letter warns that the sale could “do significant harm to the global NGO sector,” and that Ethos Capital “has not earned the trust of the NGO community.”

While the idea of “trust” may seem unusual in the context of internet addresses, it also underscores the growing anger being directed at those on the boards of both ICANN and ISOC that the internet community feels are supposed to protect ordinary users from the profit-making imperatives of large corporations and corporate raiders.

Both organizations have already made decisions about whether to listen to the clearly expressed concerns of the internet community they exist to represent, or to push ahead with the sale, which is set to complete in the first quarter of next year.

The fact that neither organization is prepared to say what those decisions are days later is both a sign that they don’t expect them to be well received and, critics say, a sign that they have managed to insulate themselves from proper accountability. ®

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