.ORG Isn’t Broken, and We Don’t Need Private Equity to ‘Fix’ It

Ethos Capital—the private equity firm poised to purchase the .ORG domain registry for $1.1 billion—and Public Interest Registry (PIR, the entity Ethos wants to buy) have been attempting to respond to the concerns raised by the .ORG community. These after-the-fact changes just make clear that while there is nothing currently wrong with .ORG, there is a lot that could go wrong if this deal moves forward. 

Last week, we wrote about a proposal by Ethos Capital to add certain “Public Interest Commitments” to the contract governing the operation of the .ORG domain registry. Our post explained why that proposal doesn’t solve the problems with the planned sale. Since then, Ethos and PIR have hosted two webinars to discuss how their plan supposedly addresses the concerns that EFF and over 800 other organizations—along with Members of Congress, UN Special Rapporteurs, and state charity regulators [pdf]—have raised. Nothing said on those webinars changed our analysis. Instead, they only further reinforced that Ethos’s plan for a for-profit PIR is one that’s unsound at its very foundation.

While we can—and will—point to specific places where Ethos and PIR’s arguments fall apart, the broader theme to take note of is that this cannot be fixed. All of the proposed changes have holes that don’t get at the underlying problems presented by the deal. On the other hand, the current system is stable and functional, and changing it threatens to introduce instability and dysfunction with no countervailing benefit to the community.

Ethos Touts Its Willingness to Take Risks—But at Whose Expense? 

Ethos and PIR have repeatedly defended the proposed deal by arguing that converting PIR to a privately owned, for-profit enterprise will allow it to offer “new products and services,” but without explaining what those new offerings might be. On Thursday, they finally admitted that they actually don’t know what additional products and services .ORG registrants want or need, citing a lack of market research. Ethos founder and CEO Erik Brooks then made a troubling case for why Ethos’s purchase of PIR would make these hypothetical new offerings possible: Launching new products requires taking financial risks, and non-profit organizations “are not in the business of taking risks”—but Ethos is.

This is not the selling point Brooks seems to think it is.  .ORG’s value to its registrants is being a reliable and recognized domain for hosting their websites and email systems—which it already offers. The .ORG registry should decidedly not be in the business of taking risks with non-profits’ essential infrastructure by adding bells and whistles that no one is asking for. If those risks don’t pan out, it may well be the non-commercial .ORG community that suffers as Ethos makes up for the loss by skimping on technical upkeep, raising prices, engaging in censorship-for-profit—or bankrupting PIR and walking away with the gains.

A Misleading Financial Picture

Ethos and PIR continue to push a narrative that goes like this: PIR currently has to send all of the money it makes to its non-profit parent organization, the Internet Society (ISOC); ISOC then uses those funds for purposes that don’t benefit PIR. As a result, PIR has not had funds to invest in reaching new markets or introducing new offerings. If PIR is freed of that burden, every dollar that PIR would have sent to ISOC will now be available for reinvestment in PIR.

There are a few problems with this narrative. For one, the assertion that PIR is required to send its entire net income to ISOC is at odds with PIR’s articles of incorporation, which establishes charitable purposes other than just financially supporting ISOC. And history shows that PIR can, in fact, invest in itself should it choose to. PIR’s 2018 Form 990, for example, states that PIR spent $1,369,537 on “advertising and promotion” and another $863,042 on “marketing” that tax year. In 2012, PIR took a gamble and applied for six new gTLDs (including .ngo and .ong) to add to its domain portfoli