ICANN rejects sale of .org registry to for-profit investor group

SAN FRANCISCO (Reuters) - A body overseeing web addresses said it has vetoed a $1.1 billion deal to sell control of domain names ending in .org to a private investment firm after an outcry from internet pioneers and officials including California’s attorney general.

The surprise plans by the Internet Society to sell the Public Interest Registry to a newly formed for-profit firm, Ethos Capital, announced in November, provoked alarm from many of the more than 10 million entities that use the .org suffix, associated with non-profit organizations.

ICANN, the Internet Corp for Assigned Names and Numbers, which gave the assignment of .org to the Internet Society and retains some rights, said on Thursday it was rejecting the deal.

In particular, it cited concerns that there would be a drive to reward Ethos stockholders while repaying $300 million in debt taken on during the transaction.

“The ICANN Board finds that the public interest is better served in withholding consent as a result of various factors that create unacceptable uncertainty,” the Los Angeles-based body said on its website.

Formerly overseen by the U.S. Commerce Department, ICANN has expanded web addresses to new domains and new languages and often works to promote the web name industry.

ICANN said it conducted due diligence into the deal after questions about Ethos’ ties to former ICANN officials.

California Attorney General Xavier Becerra, who has regulatory oversight of ICANN as it is a non-profit based in the state, urged it to reject the Ethos deal on multiple grounds.

He cited a lack of transparency around the buyer and questioned why the Internet Society did not pursue other means to diversify its revenue.

“ICANN’s analysis of the need for the stability of the .org registry must take into consideration that some of the .org registrants are critical organizations dedicated to assist in times of crisis,” Becerra wrote in an April 15 letter.

“The list of such organizations is long, including the World Health Organization, the World Bank, the Red Cross, Doctors Without Borders, and the United Nations.”

Others who objected to the planned sale include founding ICANN Chair Esther Dyson, founding ICANN President Michael Roberts and Electronic Frontier Foundation Executive Director Cindy Cohn.

Reporting by Joseph Menn; Editing by Edwina Gibbs