Internet Community Cries Foul As “.ORG” Domain Name Registry Acquired by “For-Profit” Company Just Six Months After Price Caps Removed

NEW YORK, NY – Last week, the Public Interest Registry (PIR) – the non-profit organization that maintains the .org domain – agreed to be purchased by Ethos Capital, a tech-focused private equity firm; an act which has caused more than a few members of the Internet community to cry foul, as the idea of the .org domain being in the grasp of a strictly for-profit company such as Ethos seems to run in direct contrast to what the domain is typically used for.

The domain name .org is a top-level domain and one of the original domains established in 1985 – along with .com, .us, .edu, .gov, and .net – and has been operated by the PIR since 2003. The domain was originally intended for non-profit entities, and is commonly used by schools, open-source projects, and communities, but also by some for-profit entities; as of 2015, there were 10.5 million .org domains registered by various organizations.

Another issue that some see as prevalent in regards to Ethos’ purchase of PIR – and their subsequent control of the .org domain – is the fact that, on June 30 of this year, Internet Corporation for Assigned Names and Numbers (ICANN), a non-profit organization responsible for management of Internet names and addresses, announced that they were removing the price caps on .org domain names. The move at the time to scratch .org price caps was greeted with a level of trepidation similar to when Ethos purchased PIR, and indeed many people felt the two acts occurring so close together to be odd; the fact that ICANN basically ignored thousands of public comments protesting the removal of the price cap was viewed negatively.

Many non-profits who run websites for their organizations rely on the low costs of purchasing and maintaining .org domain names; despite the fact that PIR initially confirmed after ICANN’s announcement that they would not be raising their fees for .org domains, that may no longer be the case now that PIR is in the hands of a company that is driven by profit.

However, in a press release put out in the wake of the purchase, Ethos Capital Founder and CEO Erik Brooks noted that PIR would continue to maintain an open and honest relationship with the public at large, and that consideration would be given to seeking B Corporation certification for PIR, a status which requires a company to meet specific social sustainability, environmental performance, and accountability/transparency standards.

“We are excited to support PIR’s mission and build upon the incredible work it has done to promote success and positive impact for the .ORG Community,” Brooks said. “As part of our commitment to setting the gold standard of registry operations, we will be establishing a Stewardship Council that will serve to uphold PIR’s core founding values and provide support through a variety of community programs.”

Jon Nevett, CEO of Public Interest Registry, asserted in the same release that the .org domain was in good hands.

“Since the inception of Public Interest Registry, our mission has been to enable the .ORG Community to use the Internet more effectively and change the world for the better,” he said. “That will not change. We have enjoyed a long and successful relationship with the Internet Society, and are thrilled that we will be able to continue – and expand – our important work with Ethos Capital while sustaining our commitment to the .ORG Community going forward.”

One of the many groups opposing both the lifting of the .org price cap by ICANN and the sale of PIR to Ethos is the non-profit Internet Commerce Association (ICA), a group that represents domain owners. In a strongly-worded letter delivered to ICANN upon news of the sale to Ethos, ICA General Counsel Zak Muscovitch berated the decisions of ICANN and bemoaned the potential negative ramifications for non-profits.

“Surely you can now appreciate the terrible blunder that you have made. If you were led to believe that removing price caps on .Org domain names was a sound approach because the registry would remain in the hands of a nonprofit foundation, you have clearly been misled,” he said. “If you were led to believe that despite being the effective owner of the .org registry, you were somehow forced to let your service providers tell you how much they can charge, instead of the other way around, you have been led astray. If you have been told that .Org does not have market power within the nonprofit sector, you have been led astray. If you have been told that competition from other gTLDs will constrain .org prices, you have been led astray”

Some private equity firms have developed a negative reputation in recent years for purchasing struggling businesses and then effectively hastening their demises; one prime example is when private-equity firms Bain Capital and Kohlberg Kravis Roberts – in conjunction with real-estate firm Vornado Realty Trust – took over retailer Toys R Us in 2005. As part of the acquisition deal, Toys R Us agreed to take on billions in their new owner’s debt, a burden that ultimately proved to be too much for the franchise to bear; in 2018, Toys R Us declared bankruptcy and liquidated all of its U.S. stores, costing 50,000 employees their jobs.

When you take that type of for-profit business approach, and apply it to a non-profit, you can see why Ethos Capital’s purchase of PIR which will no longer be a non-profit, is causing some folks to worry about the potential outcome and the future of the .org domain name as well as the opportunity for limitless price increases for its domain registrants, most of which are likely non-profits themselves.