FOR IMMEDIATE RELEASE
Feb. 21, 2020
Internet, Federal Authorities Must Seek Answers Before Any Sale of Dot-Org
Americans for Financial Reform Education Fund and the Electronic Frontier Foundation today called on authorities to ensure that the proposed purchase of the organization that administers all of the non-profit .ORG internet domain names by a private equity firm does not endanger this vital public resource.
In a letter today, the groups said the Internet Corporation for Assigned Names and Numbers, which coordinates the operation and maintenance of the internet’s domain name system, should make sure that the transaction will “not imperil the future operation of .ORG” before allowing it to proceed. The groups sent a letter raising similar issues to the Federal Trade Commission.
As a first step, AFR and EFF asked that the authorities require the disclosure of critical financial information about the transaction, including how the private equity firm, Ethos Capital, intends to service the debt of the new company, PIR LLC.
The groups wrote:
“PIR LLC will have to generate substantial additional revenue to service the debt which could force PIR LLC to take advantage of its monopoly position to raise prices to unsustainable levels, impose new service charges, reduce technical upkeep that could impair web connectivity or non-profit email traffic, or pursue other business strategies that could undermine the independence of non-profits including suspending or transferring domain names, in effect a censorship-for-profit strategy that has been used by other domain registries and internet companies.”
“A private equity transaction poses unique risks to the .ORG non-profit community. The private equity firm seeking to acquire .ORG is using the classic leveraged buyout strategy of saddling the new company with a massive debt load,” said Patrick Woodall, senior researcher at Americans for Financial Reform. “This formula often leads to disaster for the company and can be especially corrosive for private equity takeovers of entities with a public mission, as is the case with .ORG. The public needs far more information about the financial terms of this transaction before the relevant authorities make a decision on whether it should proceed.”
“Given the poor track record of private equity firms running vital services for the public, these authorities need to take a close look at Ethos Capital’s financial plans for .ORG, and the structure of the deal,” said EFF Senior Staff Attorney Mitch Stoltz. “Establishing an advisory council doesn’t solve the problem, especially since PIR’s new owners will appoint the council and control what information its members will see.”