1/24/2020 Inside the Billion-Dollar Battle Over .Org - The New York Times

https://www.nytimes.com/2020/01/07/technology/dot-org-private-equity-battle.html 1/2

https://nyti.ms/2tC4Egg

Inside the Billion-Dollar Battle Over .OrgA private equity firm wants to buy the internet domain used by nonprofits. A group of online pioneers says it is not the place tomaximize profits.

By Steve Lohr

Jan. 7, 2020

Two months ago, Ethos Capital, a private equity firm, announced that it planned to buy the rights to a tract of internet real estate formore than $1 billion.

But it wasn’t just any piece of digital property. It was dot-org, the cyber neighborhood that is home to big nonprofits andnongovernmental organizations like the United Nations (un.org) and NPR (npr.org), and to little ones like neighborhood clubs.

The deal was met with a fierce backlash. Critics argued that a less commercial corner of the internet should not be controlled by aprofit-driven private equity firm, as a matter of both principle and practice. Online petitions and letters of concern came from hundredsof organizations, thousands of individuals and four Democrats in Congress, including Senator Elizabeth Warren of Massachusetts.

Rarely has the acronym-strewn realm of internet addresses — so-called domain names — stirred such passion.

Now, a group of respected internet pioneers and nonprofit leaders is offering an alternative to Ethos Capital’s bid: a nonprofitcooperative corporation. The incorporation papers for the new entity, the Cooperative Corporation of .ORG Registrants, were filed thisweek in California.

The goal of the group is not only to persuade the Internet Corporation for Assigned Names and Numbers, which oversees internetdomain names, to stop the sale. It is also to persuade ICANN to hand it the management of dot-org instead.

“This is a better alternative,” said Esther Dyson, who served as the first chair of ICANN, from 1998 to 2000, and is one of sevendirectors of the new cooperative. “If you’re owned by private equity, your incentive is to make a profit. Our incentive is to serve andprotect nonprofits and the public.”

Since 2003, dot-org has been run by the Public Interest Registry, which is controlled by the Internet Society, a nonprofit that helpsdevelop internet standards, education programs and policy. The registry holds a contract to manage dot-org, which was renewed lastyear for 10 more years. With a sale to Ethos Capital, the Internet Society would gain an endowment to fund its operations and get out ofthe business of operating dot-org.

Esther Dyson, a former chair of ICANN, is part of a recently formed cooperative thatwants to manage dot-org. Kelly Sullivan/Getty Images

1/24/2020 Inside the Billion-Dollar Battle Over .Org - The New York Times

https://www.nytimes.com/2020/01/07/technology/dot-org-private-equity-battle.html 2/2

In buying the Public Interest Registry, Ethos Capital would acquire the rights to run dot-org and collect annual fees from the nearly 10.5million registered dot-org names, held by both nonprofits and domain-name speculators. Those yearly fees are $10 to $20 on average,but can be far higher for big sites that buy several names to protect their brand and get added services like security against onlineattacks.

Opponents of the private-equity sale said they feared that to make an attractive profit on its pricey deal, Ethos Capital would have toraise prices, cut expenses, skimp on service — and most likely sell users’ data.

Ethos Capital said those concerns were unfounded.

In a blog post in December, Erik Brooks, the firm’s founder, said that “we understand that change brings uncertainty and concern,”which was reflected in “alarmist statements.”

Ethos Capital, Mr. Brooks said, wants to invest in dot-org “for the reputation of the platform and the values it represents in themarketplace.” He said his firm planned to build on that asset.

Big price increases have been a major concern for critics of the deal. When ICANN renewed the 10-year contract with the PublicInterest Registry last year, it removed a price cap that limited price increases to 10 percent a year at most. That move was part of abroader ICANN policy to ease price controls across all internet domains.

Ethos Capital has pledged to adhere to the 10 percent cap, though it would have no contractual obligation to do so. In blog posts, theprivate equity firm said it planned to invest in new services and clamp down on spam, security attacks and other abuse launched fromsome illicit dot-org domains.

Some nonprofits worry that any cleanup effort could result in censorship, even if inadvertently. As the owner of the registry for dot-org,Ethos Capital would manage the acceptable business practices and conduct for dot-org domains. The same freedoms that open the doorto extremist groups on some dot-org sites, nonprofit leaders say, also help protect free speech on public-interest dot-org sites indeveloping countries with authoritarian governments.

Ethos Capital said it would never facilitate censorship. It has also vowed to set up an independent “stewardship council” to monitor itsmanagement of the dot-org network.

Since the deal was announced, Mr. Brooks and top executives of the Internet Society and the Public Interest Registry have spoken withskeptics in person, in web sessions and on conference calls, seeking to reassure them that dot-org would be in safe hands. And onTuesday, they submitted a detailed response to the questions raised by the four members of Congress.

But whether the trust-building campaign has made progress is uncertain. Amy Sample Ward, the chief executive of NTEN, a nonprofitthat assists other nonprofits with technology, is unconvinced.

“The internet was meant to be this democratizing force around the world, and nonprofits do that,” Ms. Sample Ward said. By contrast,she said, Ethos Capital is a creature of the “capitalist-based internet industrial complex.”

For the Ethos Capital deal to succeed, ICANN must give its approval. In December, it sent out a request for more information about theproposed transaction. ICANN has not indicated the timing of a decision, but one is expected early this year.

The newly formed cooperative group is hoping it can keep dot-org out of the for-profit economy. “There is a common good here that is atrisk of being undermined,” said William Woodcock, a director of the cooperative, who is the executive director of the Packet ClearingHouse, a nonprofit that provides internet operational support for domains.

The cooperative corporation, which would run dot-org, collect fees and distribute savings back to the nonprofit users, is an “alternativemodel with a long-term commitment to the open and noncommercial internet,” said Katherine Maher, a director who is the chiefexecutive of the Wikimedia Foundation, the nonprofit parent of Wikipedia.

“There are some things that operate better noncommercially, and that’s O.K.,” she said.