THE OFFER would confound anyone who has ever used a web browser. A corner of the internet associated with charities attracted an investor willing to take it over by paying a sum typically reserved for stakes in hot startups. But a private-equity firm’s bid for control of the .org domain used by millions of non-profit groups—some as large as the UN, some as small as local schools—has jolted internet-policy wonks. The proposed sale has also spurred into action internet advocates who want to protect one of the few parts of the online realm that has not gone commercial.
The controversy erupted in November. The non-profit organisation called the Internet Society (ISOC) that runs the .org registry announced that it was selling the management rights to Ethos Capital, a private-equity firm based in Boston. ISOC was created in 1992 by the net’s founders to help manage it. It was awarded control of the .org registry in 2002 for no fee.
Back then ISOC was in financial distress. Running .org was intended to fund the organisation’s work. A domain-name registry—with its annual renewal fees—is a lucrative monopoly, even if users of the addresses are charged only around $20 each year. In 2002 the .org registry generated around $15m in revenues. Today it collects more than $90m a year.
That may explain Ethos’s offer of $1.1bn. Yet the firm’s motivations remain opaque. Neither the investors in Ethos nor the directors of a firm that would control the .org registry, Purpose Domains Direct, have been disclosed. Documents released this month by the current .org registry, describing the deal, are full of redaction lines.
At the same time, a number of former officials of the body that manages the entire internet-address system are advising Ethos. That body is called the Internet Corporation for Assigned Names and Numbers (ICANN) and must give its consent to any new arrangement over .org.
To many internet users concerned about its technical management, the deal seems like a betrayal. To them, it is as if the internet’s founding fathers are selling out. Non-profit users had long been guaranteed price caps on their .org addresses. But they were lifted in June despite loud opposition.
A group of internet grandees came forward this month with an alternative proposal. They want to turn the .org registry into a co-operative owned by the address holders themselves. The group includes Esther Dyson, an internet pioneer who was ICANN’s founding chair from 1998 to 2000. On January 16th several American legislators, including Elizabeth Warren, called on ICANN “to reject this private-equity takeover”. They fear the deal lacks transparency and could increase users’ costs. They also fret that the potential new owners, who plan to finance a third of the deal with debt, might skimp on service.
Ethos says it will honour the previous price cap and will set up a “stewardship council” to hear feedback from .org registrants. ISOC’s president argues that the deal gives the organisation a hefty endowment to support the net’s development without being tied to a single funding source, .org.
The ICANN board is to meet on January 24th-26th in Los Angeles. The body’s rules require it to reach a decision on the matter by February 17th. ICANN argues that its remit is narrow—not to approve the sale per se, but to give its consent to the change of control of .org from ISOC to Ethos. Yet that change would represent something much broader: a shift away from the internet’s non-commercial roots.■
This article appeared in the United States section of the print edition under the headline “A proposed sale of rights to .org web addresses sparks a backlash”