The board of directors at ICANN rejected the sale of the .org registry to private equity firm Ethos Capital. The possible $1.135 billion deal effectively died today after months of debate over the decision to transfer the registry from the non-profit Internet Society (ISOC) to Ethos. Many advocates pressing against the deal argued that it would saddle the company with debt and force it to raise prices on users of these internet addresses. The deal had been suspended since December.

ICANN Rejects Ethos Deal

In a blog post, the non-profit domain overseer wrote:

“After completing its evaluation, the ICANN Board finds 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. Factors that were considered in determining reasonableness include, but are not limited to:

• * A change from the fundamental public interest nature of PIR to an entity that is bound to serve the interests of its corporate stakeholders, and which has no meaningful plan to protect or serve the .ORG community.
• ICANN is being asked to agree to contract with a wholly different form of entity; instead of maintaining its contract with the mission-based, not-for-profit that has responsibly operated the .ORG registry for nearly 20 years, with the protections for its own community embedded in its mission and status as a not-for-profit entity.
• The US$360 million debt instrument forces PIR to service that debt and provide returns to its shareholders, which raises further questions about how the .ORG registrants will be protected or will benefit from this conversion. This is a fundamental change in the financial position from a not-for-profit entity.
• There are additional uncertainties, such as an untested Stewardship Council that might not be properly independent, or why PIR needs to change its corporate form to pursue new business initiatives.
• The transaction as proposed relies on ICANN as a backstop for enforcement of disputes between the .ORG community and the registry operator in an untested manner.