January 16, 2020

Lawmakers Urge Internet Governing Body to Block Private Equity Firm Ethos Capital from Taking Over the .ORG Internet Domain Name Registry

Takeover is not in the public interest and ICANN should deny approval; Lawmakers' letter comes as ICANN decision approaches

Washington, DC - United States Senators Elizabeth Warren (D-Mass.), Ron Wyden (D-Ore.), Richard Blumenthal (D-Conn.), Edward J. Markey (D-Mass.), and Representatives Anna G. Eshoo (D-Calif.) and Mark Pocan (D-Wis.) sent a letter to the leadership of global Internet governance body the Internet Corporation for Assigned Names and Numbers (ICANN), urging them to block the Internet Society's (ISOC) proposed sale of the Public Interest Registry (PIR) and its contract to operate the .ORG internet domain name registry to the private equity firm Ethos Capital. The lawmakers raised concerns that the approval of this transfer could result in increased costs, cuts in service and reliability problems, monetization of .ORG registry data, and censorship of .ORG websites. The lawmakers' letter comes as the Internet community awaits ICANN's impending decision on whether to approve the transfer of the registry.

ICANN manages the operation of the Internet's domain name system (DNS) via contracts with registries, or companies that administer domain names under a top-level domain such as .ORG, .COM, and .NET, and has the power to provide or withhold consent in response to a request for a change of registry control such as this one.

After reviewing documents and information requested by and provided to Congress and ICANN by PIR, Ethos Capital, and ISOC, the lawmakers raised their concerns about whether Ethos Capital will be a responsible steward of the .ORG registry and whether the registry will be operated under meaningful oversight. Their letter also raised concerns that Ethos Capital, a private equity firm established just last year, has no track record of running an operation as large or as critical to the public interest as the .ORG registry, and that private equity buyouts in a range of industries have been shown to result in higher costs and worse outcomes for consumers and other stakeholders.

"The Ethos Capital takeover of the .ORG domain fails the public interest test in numerous ways: it threatens the quality and reliability of .ORG websites, and could severely limit access to these domains via price increases and 'arbitrary censorship,'" wrote the lawmakers. "And the current commitments and agreements made by Ethos Capital fail to mitigate these risks."

The lawmakers described how the private equity takeover will saddle PIR with debt and give an unproven private equity firm substantial authority and virtually unlimited power to raise prices, reduce or modify services, monetize its power over the top-level domain, and fail to run the domain in a manner consistent with the public interest.

"Public interest should be at the forefront of any ICANN decision, but it should be especially so in determining who should be approved to operate the .ORG registry... the proposed sale of .ORG is against the public interest and would violate ICANN's commitment to 'preserve and enhance... the operational stability, reliability, security... and openness of the DNS and the Internet,'" concluded the lawmakers, citing ICANN's bylaws. "We urge you to reject this private equity takeover of .ORG."

Senators Warren, Blumenthal, and Wyden, and Congresswoman Eshoo previously sent a letter to PIR, ISOC, and Ethos Capital asking a series of questions about whether nonprofit groups, free speech and internet users would be harmed by the sale of .ORG domains to a private equity firm.

Senator Warren has been a vocal critic of private equity abuses throughout her time in the Senate and is fighting for reforms that protect consumers, communities, students, workers, investors, and elections. In July, Senator Warren and Representative Pocan, along with a number of Democratic colleagues, introduced the Stop Wall Street Looting Act, a comprehensive bill to bring greater responsibility to the private equity industry by holding private equity firms responsible for the liabilities of companies under their control and requiring greater transparency in private equity firms' practices.