[Chapter-delegates] Why I am suspicious of Ethos and the sale of .org

[Richard Hill]

I have been asked to explain why I am suspicious of Ethos.  Here are my reasons.

I find it surprising, and totally inappropriate, that ISOC, an organization that has vigorously called for openness and transparency, has negotiated the sale of PIR in secrecy, with no consultation with its constituencies.

That secrecy appears to have been imposed by Ethos as part of the deal.

For the reasons given below, I don't understand why Ethos imposed such secrecy, and that makes me suspicious.

We have been told that deals of this nature are always negotiated in private.

I disagree. It is true that many business deals are negotiated in private, and that Ethos, as a privately-held company, has no obligation to make anything public, and might even have an obligation to keep everything secret.

But the deal we are talking about here is not just an ordinary deal. It is a deal to transform an organization, PIR, that was created to manage .org in the public interest (as its name says) and, in exchange for a 5 million dollar start-up grant, was supposed to ensure that the “.org registry returned, after some appropriate transition period, to its originally intended function as a registry operated by non-profit organizations for non-profit organizations”.

So there is a radical shift in the nature of PIR's ownership: from a (to date) respected non-profit - ISOC - to an unknown, brand-new, small, investment firm - Ethos.

Surely Ethos knew that this radical shift would lead to questions.  Ethos assures us that all is well, that their name does reflect their intentions, namely to act ethically, and that under their ownership PIR will continue to manage .org in the public interest.

But they have not provided any convincing, detailed, information to support their claims. For example, they have not stated that the new PIR would be incorporated as a B-Corporation in a jurisdiction that envisages such incorporation, they have not provided the future bylaws of PIR for public comment, they have not made binding commitments to cap future price increases, etc., etc.

Surely Ethos knows, by now, that not providing such information is creating increasing suspicion and ill-will.

Under pressure from the ISOC constituencies, Ethos agreed to disclose the price of the transaction: 1.135 billion.

But that has further increased suspicion because some people (including me) don't understand why trust funds created by billionaires would place that sort of money at 4% return on investment.  I would expect that a prudent investor would seek a significantly higher rate of return for an investment with a comparable risk profile.

Recall that ISOC has stated, correctly, that revenues from PIR are stagnant and might decline in the future.

Sure, different marketing of .org might reverse that trend and increase revenues, perhaps even without price increases.

But Ethos has not provided any indication of what those marketing plans might be.

Leverage (using borrowing to finance an acquisition) might be a way to obtain a higher rate of return without revenue increases.

But Ethos refuses to provide information on its financial plans. 

So we have no answers to questions that are legitimate from the point of view of people who are seeking evidence that .org will continue to be operated in the public interest, and in particular in the interest of non-profit organizations.

Lack of answers leads to suspicion and ill-will.

Suspicion and ill-will are not good for business.

It seems to me that any prudent business, would, at this point, drop the secrecy requirement and comply with ICANN's request to be transparent.

So why isn't Ethos doing that?

I cannot understand why, and that makes me even more suspicious.

Suspicion leads to speculation. It's a normal (and healthy) human characteristic: if we don't understand something, we try to figure out what we don't understand.

Here is one speculative explanation of what may be going on:

  https://medium.com/savedotorg/donuts-2-0-is-org-a-sideshow-in-a-larger-bid-to-own-the-dns-c87060326f49   


Best,
Richard