Tag: Ethos Capital

Data escrow no longer escapes the concentration of the domain names industry

concentration of the domain names industry

There is a lot of talk about the concentration that is taking place in registries and registrars, two of the key actors in the domain names ecosystem. The two companies that have been in the news the most in the last two years, are Ethos Capital and Clearlake Capital, two private equity firms that have specialised in acquisitions in this sector.

Ethos Capital, founded in 2019, had proposed in November in a 1.135 billion euros deal to acquire Public Interest Registry, the registry in charge of the historical extension .ORG, which then claimed some 10.5 million registrations.  If this deal was not done after a surprise veto from ICANN as part of a provision of the Registry agreement that provides for an approval process for each type of transfer whether it is a change of control or a major subcontracting agreement, Ethos Capital was quickly comforted with the confirmed acquisition on March 31, 2021 of the registry Donuts, which in December 2020, had concluded the acquisition of Afilias, the registry operator of the .INFO and .MOBI gTLDs, among others. Donuts currently claims 270 generic extensions out of a total of 1268, i.e. 21% of them! It recently acquired the .watches extension from the luxury goods manufacturer Richemont.

As for Clearlake Capital Group, this company founded in 2006, acquired Endurance International in a $3 billion deal and recently took a significant stake in Web.com. The two entities were merged to form a new company called Newfold Digital. Newfold’s portfolio includes registrars such as Register.com, Network Solutions, Domain.com, BuyDomains, BigRock, PublicDomainRegistry and CrazyDomains as well as BlueHost and HostGator, two very important companies in the field of web hosting. The group claims approximately 16.5 million domain names.

Another well-known player, the American registrar GoDaddy, announced in February 2021 that it was raising 800 million dollars to make acquisitions. Since then GoDaddy seems to have gone on the offensive. The world’s largest registrar by volume is currently finalising the acquisition of Minds & Machines, a registry of new generic extensions (27 in all) in a deal worth 120 million dollars. Europe is of course not immune to the concentration phenomenon, even if the deals taking place are not as high as those mentioned above.

Indeed, these are just a few examples of a concentration that seems to be accelerating unstoppably in the domain name sector. Yet another important key players in the domain name management, the escrow operators whose critical mission is to store and safeguard domain name data for registrars and registries, rather like a bank, seemed less exposed to the phenomenon until now. However, if we look at the list of ICANN-designated agents, we recently noticed that one of them, namely Iron Mountain, has disappeared. This is not due to an error but to the fact that this actor has been absorbed by its competitor NCC Group. The deal, made in June, is estimated to be worth 165 million dollars. 

Across the concentrations now taking place in all the key areas necessary for the management of domain names portfolios, questions arise about the range of services on offer, which is constantly shrinking as a few major players take over the market, and also about prices (PIR had obtained from ICANN the lifting of the ceiling on .ORG prices just before Ethos Capital made its takeover offer) and the control of the domain name data, a control that seems difficult with the globalisation of the market. It should be remembered that NAMESHIELD remains an independent French company for which all these issues are at the heart of its concerns.

Image source : Geralt via Pixabay

.ORG news – NGOs against the .ORG registry’s sale to Ethos Capital

Sale of .ORG registry - PIR Public Interest Registry - dot ORG - Nameshield

At the end of 2019, the announcement of the .org registry’s sale, Public Interest Registry (PIR) by Internet Society to Ethos Capital, a private equity firm, created a debate, which was also the subject of a previous article on this blog.

For reminder, this announcement caused several concerns from NGOs, such as the increase of .ORG prices and the implementation of rights protection policies that could lead to a form of censorship, as is already the practice in some countries. These fears led Electronic Frontier Foundation (EFF) to launch the SaveDotOrg campaign to raise awareness about the potential impact of this sale. To date, 846 organizations and 25 119 people have signed this petition demanding Internet Society to stop the sale.

In front of these many complaints, ICANN postponed the approval of the .ORG registry’s sale to Ethos Capital and requested additional information from Internet Society.

« Public Interest Commitments »: The measures proposed to address the .ORG community’s concerns

In response to these criticisms, Ethos Capital and Public Interest Registry try to reassure by proposing the implementation of “Public Interest Commitments” (PIC), binding commitments which would ensure that the .org prices’ increase would be limited.

Among these commitments, they also propose the creation of a “Stewardship Council” (a council for the .org management) which could influence decisions taken by PIR and thus ensure the preservation of freedom of expression.

These PIC would be added to the Registry Agreement, the contract between the registry and ICANN regarding the functioning of the registry.

A for-profit registry to defend non-profit organizations?

During the last ICANN summit, organized remotely from 7 to 12 March 2020 because of the Covid-19 pandemic, several NGOs, including EFF, mentioned this .ORG registry’s acquisition by Ethos Capital and asked ICANN about how it plans to review the change of control of the .ORG registry.

According to EFF, forming a “Stewardship Council” will not resolve the NGOs’ concerns. Indeed, the initial members of this council will directly or indirectly be selected by PIR and PIR will have the ability to veto new council members, which would thus ensure that the council will stay in lockstep with PIR.

Regarding the .ORG prices, according to NGOs, the implementation of the PIC doesn’t ensure a limitation of the prices increase. An amending of the Registry agreement can be negotiated at any time by the registry’s owner and ICANN, despite a public opposition. That’s what happened in June 2019, when the .ORG Registry Agreement was revised to diminish registrants’ rights and remove price caps. Furthermore, ICANN indicated in 2019, its interest in exiting the role of price regulation, but the PIC implementation would place ICANN back into that role.

Therefore, according to NGOs, these “Public Interest Commitments” would not protect adequately the .org community.

The NGOs’ questions remained without answer during the last ICANN summit, and this acquisition is still under review by ICANN.

“We acknowledge the questions and concerns that are being raised” says ICANN. “To ease those concerns and maintain trust in the .ORG community, we urge PIR, ISOC, and Ethos Capital to act in an open and transparent manner throughout this process. […] We will thoughtfully and thoroughly evaluate the proposed acquisition to ensure that the .ORG registry remains secure, reliable, and stable.”

To be continued.

Why is the sale of .ORG registry a source of debate?

Sale of .ORG registry - PIR Public Interest Registry - dot ORG - Nameshield

In November 2019, a press release announced that .ORG registry, Public Interest Registry (PIR), a non-profit organization managed by Internet Society, is going to be sold off to Ethos Capital, a private equity firm.

.ORG is the extension for non-profit organizations. The acquisition of PIR by Ethos has quickly concerned the organizations using .ORG, on the basis of the potential misuse of the extension by its new owner, which has, by its very nature, profit motives.

The concern? That the registrations and renewals fees for .ORG domain names increase.

Yet, key figures of the Internet’s world, like Andrew Sullivan (Internet Society CEO) are exited, seeing in this a strong strategic partnership and a significant financial contribution allowing Internet Society to advance its mission of a “more open, accessible and secure Internet for everyone”, as he wrote in the press release about the acquisition of November 13, 2019.

It would seem that the fears created find their origin in the “surprise” and lack of transparency around the deal, since the transaction amount has not been disclosed.

These fears are, of course, the corollary of the removal on June 30, 2019, of the price caps imposed until now to .ORG fees (historically low) by ICANN, despite many reservations expressed by the community. Finally, the fact that Ethos has directly or indirectly a number of close connections to former ICANN members raises concerns to several voices of the industry.

The fear to see the increase of .ORG prices led Electronic Frontier Foundation (EFF) to launch the SaveDotOrg campaign, which aims to raise awareness about the potential impact of a .ORG price increase on the NGO’s budget constraints.

Also the possibility that Ethos Capital later implements a principle of rights protections that could lead to a form of censorship, as currently practiced in some countries wishing to silence NGOs.

In front of these protests, ICANN suspended the acquisition operation last December and requests clarification from the Internet Society.

More recently, in January 2020, a new candidate of the .ORG extension acquisition has appeared. It is a cooperative corporation (Cooperative Corporation of .ORG Registrants), gathering some web pioneer and former members of ICANN.

To be continued!