[CPWG] The PIR sale

[Marita Moll]

Thanks for this Roberto. You are presenting some interesting new angles. 
Some responses inline

On 12/7/2019 9:06 AM, Roberto Gaetano wrote:
> Hi all.
> While submitting my thoughts to Jonathan for the consolidated ALAC 
> document to present to ICANN, it occurred to me that analysing the 
> past facts there are also questions that we want to submit to 
> Ethos/PIR and ISOC. Maybe some of the questions to Ethos/PIR and/or 
> ISOC have been asked already in the meantime, but I kept them for 
> completion.
> I am therefore posting this - unfortunately long - contribution for 
> discussion within ALAC.
>
> *_The initial award of the contract to PIR_*
> The core of the matter is whether ISOC/PIR were chosen because of 
> their non profit status. The counter argument is that the Board 
> insisted in having a bid that was open also to commercial parties. At 
> the time I was not in any of the bodies who made the decisions, but as 
> a former Chair of the DNSO General Assembly I had some exchange of 
> opinions about this and I was firmly convinced that this stance has 
> been taken in order to limit the possibility of Verisign to raise 
> issues with USG that could invalid the bid and/or to appeal to the 
> court for biased behaviour of ICANN. In simple words, although the 
> orientation was to have .org managed by a non-profit, ICANN was very 
> weak at the time and highly exposed to Verisign lawsuits, and 
> therefore had to move carefully. The proof is in the pudding: when the 
> contract was awarded to ISOC/PIR there were some constraints that were 
> directly related to the Public Interest commitment of that bid.
> The questions are therefore:
>
>   * to ICANN - did the consideration that ISOC/PIR was a non-profit,
>     and therefore a further step towards achieving the declared
>     purpose of ICANN about introducing diversification and competition
>     in the domain name market, an element that the Board took into
>     account in making a decision? If so, why is the situation so much
>     changed that ICANN allows the major gTLDs to be concentrated in
>     for-profit hands? Would this not be a risk of commercial
>     organisations to form a cartel that can adversely influence the
>     market? How is a monopoly by Verisign, that was the target of
>     ICANN’s action at the time, substantially different from a cartel
>     between the major commercial registry operators that will arise if
>     PIR starts operating for profit? Does ICANN have sufficient
>     guarantees that Verisign is not behind this operation to eliminate
>     a competitor? The last question is not peregrine, considering the
>     operation that Verisign has crafted about .web, creating a puppet
>     company to successfully counter Afilias’ bid, all without ICANN
>     seeing anything strange about it
>
/ re: Verisign and puppet companies -- it's an interesting theory, but, 
even if it were true, no one is going to admit it -- even ICANN -- until 
truth comes out through a 3rd party. So I am not sure of the value of 
bring this into the mix. /

to Ethos - what is the position of the company about the commitments in 
the initial contract, like for instance to have an Advisory Council that 
has been over the years a link between the non-commercial and non-profit 
community and the Registry? As a side note, the original commitment was 
to have a representative from the NCUC, under my PIR chairmanship we 
changed NCUC to NCSG and reserved one seat for ALAC as well, with the 
consideration that the scenario had changed after the ICANN reform. It 
would be important to keep this two-way communication with the new PIR.

/Private equity companies cannot be held to any promises they make in 
order to close a deal. How many times have we seen this as companies 
have taken over industries promising to preserve jobs, continue 
operating in a region, etc. IMHO, we should not waste our time asking 
them to promise to behave. We could ask them to incorporate as a 
"Benefit Corporation" (according to Sam Lanfranco (economist on NCSG 
list) //B Corp duty is to more widely defined stakeholders and not 
primarily to owner profit) - //which is not the same as what they have 
suggested -- a B Corp certification. If this were to happen, then some 
of the suggestions above might hold water. But, according to Lanfranco, 
Ethos is unlikely to take this incorporation step because it would limit 
their profit making ability. They chose to be non-profit.
/

>   * to ISOC - no questions
>
>
> *_The Multi-Stakeholder model_*
> There has been an effort over the years to progress towards equal 
> representation of the stakeholders. This has been a success story for 
> ICANN, who has been instrumental in the adoption of this philosophy in 
> other fora (e.g. IGF) and in the stake-holderism becoming a reference 
> in debates about governance models. ICANN has been proactive over the 
> years in balancing commercial and non-commercial views and voices - 
> even voting power. This is a clear sign of an approach that would 
> value non-profits being an essential element that tries to balance the 
> power of for-profit enterprises. One clear example in this sense is 
> the review of the GNSO, when the commercial and non-commercial users 
> were given equal power in the reviewed GNSO while the previous 
> situation was that commercial companies had three constituencies (i.e. 
> three votes) while the non-commercial users had only one. I was the 
> Chair of the Structural Improvement Committee and of the GNSO Review 
> Working Group at the time, so I have a lot of details that can be 
> brought to the discussion. The example is indeed about action in the 
> non-contracted party house, but indicates IMHO a general philosophy 
> that ICANN has that would apply also to the contracted party house. 
> This trend will be reversed if/when ICANN endorses the transfer of the 
> .org registry to a commercial company. Moreover, PIR has been 
> instrumental in some fights for the public interest, endorsing SSAC 
> recommendations like the position against the wildcard that Verisign 
> had introduced for its own profit and against the interest of the 
> Internet users.
> The questions are therefore:
>
>   * to ICANN - does the endorsement of a move of PIR to the commercial
>     camp mark a change from the expoused commitment to equal
>     multi-stakeholderism? If not, is ICANN willing to mark the point
>     and suspend the approval in order to have Board, Staff and the
>     Community to have a deeper look at the matter? If not, what are
>     the measures that ICANN plans to propose to balance this shift
>     from non-commercial to commercial power and marked presence? Does
>     ICANN realise that this change will also alter the balance within
>     the Registry Stakeholder Group and if so are there any measures
>     that ICANN proposes to alleviate the consequences? Does ICANN
>     realise that it will be losing an essential ally in fights that
>     ICANN Advisory Committees, notably SSAC, is conducting for the
>     benefit of the whole Internet community as opposed to the benefit
>     of private interests? Who does ICANN think it will now have among
>     large gTLD Registries as supporter of SSAC Recommendations - that
>     are not binding - now that PIR is likely to change camp? Does
>     ICANN realise that at this point in time the SSAC itself is likely
>     to become irrelevant because the commercial registries cartel
>     could simply disregard the advice? Does ICANN have a plan B and
>     can this be shared with the community?
>
/I like the possible damage to the multistakeholder model angle, 
something that I have not seen explored elsewhere and an argument that 
should resonate with the board.
/
>
>   * to Ethos - over time PIR has taken a lot of commitments based on
>     putting the Public Interest above the financial interest of the
>     company itself. Does Ethos stick with this approach - and is
>     therefore ready to sign a formal commitment? If not, does Ethos
>     think that it is appropriate for a Registry that does not take
>     formal commitments for the public interest to still be called
>     “Public Interest Registry”? What is Ethos’ position vs formal
>     recommendations that come from technical ICANN advisory committees
>     like SSAC and RSSAC? What is Ethos’ position vs formal
>     recommendations that come from ALAC, the advisory committee that
>     is representing the user community and therefore the public interest?
>   * to ISOC - no questions
>
>
> *_The sale itself_*
> I have to confess that I have been taken by surprise by the sale. 
> However, linking this with some trends in the years I have been on the 
> PIR Board - also as Chair for a while - I now have a better picture of 
> the whereabouts. The point here is that we need to put ourselves in a 
> Trustee's shoes and follow the money -ooops, I meant follow the 
> reasoning. If PIR is not considered a valid steady supply of money, it 
> is obvious that an alternative has to be found. I personally do not 
> believe the story that Ethos’ proposal came out of the blue and 
> everybody in ISOC was taken by surprise. None of the actors in this 
> soap opera came out of the blue, all are insiders. To try to make us 
> to believe that there have not been contacts for months, or even 
> years, is an insult to our intelligence.
> This said, we must deal with the current situation and the way we got 
> here is irrelevant - or at least less important - in this phase. The 
> only fact is that the transaction happened in the dark, that those who 
> knew pretend they did not know, that an asset that is earmarked as 
> “Public Interest” is traded without any possible interaction with the 
> voices that represent the public interest.
> The questions are therefore:
>
>   * to ICANN - Is it normal that such a transaction, that has so much
>     impact for the community, happens without a public comment period?
>     Is it too late to start such public comment period before
>     endorsing the change? We have public comments as a rule - or at
>     least as a practice. People will not understand if ICANN gives a
>     stamp of approval to a transaction of this importance without
>     opening a consultation. Of course, it will be well understood that
>     the result of the consultation will not be binding for ICANN’s
>     decision, but not even to hold the PIR transfer until we have a
>     feedback from the community will undermine ICANN’s image vs the
>     public interest. ALAC should recommend to hold the transaction and
>     open a public comment phase.
>
/ICANN can set restrictions on the contract. It can even refuse to 
transfer the contract. Perhaps we need to take the perspective that the 
public comment period is happening impromptu -- i.e. right now. So we 
can ask for this, but I would not hold anything back waiting for it.
/
//
>
>   * to Ethos - when the asset was bought, was it understood that PIR
>     via .org was playing a substantial role in the ecosystem being the
>     only large gTLD operating in the public interest as non-profit?
>     Does Ethos plan to continue this role - regardless the formal
>     for-profit company form? What are the engagements that can be
>     formalised in a binding contract that could support this approach?
>     Are there any plans to further trade PIR assets to, e.g., a
>     registrars consortium that via vertical integration could provide
>     better return on investment at the detriment of the public
>     interest? Would Ethos/PIR be ready to go beyond the simple
>     affirmation of intents - that can be changed at any time and that
>     do not carry weight in a court - and sign a formal commitment like
>     a contract with ICANN?
>
/See comment above re: holding private equity to account//
/
>
>   * to ISOC - I remember ISOC putting a lot of pressure to PIR for the
>     rebid of the back end contract. The issue was to make sure that we
>     had a completely open and transparent bit, which of course PIR
>     did. How comes that the requirements for a PIR subcontract do not
>     apply for the mother company? Does ISOC realise that this is yet
>     another instance of “do what I say, not what I do”? Do ISOC
>     chapters realise that they have had no input - as vehicle from the
>     field - in this transaction? Can we have an official statement
>     from the ISOC Chapter representatives on the Board of Trustees -
>     some Chapters are also ALAC ALSes - on why they supported this
>     sale and how the public interest has played a role in this? Does
>     ISOC realise that it has lost the trust from large part of the
>     people who are aware of the domain name issues - who are the core
>     of the supporters historically? Do the ISOC chapters realise that
>     they are becoming irrelevant facing the role that the IETF
>     Trustees have taken on the ISOC Board and the collusion with the
>     organisational members?
>
/I have been wondering if ISOC chapters are holding back -- not wanting 
to bite the hand that feeds them? Understandable -- but unfortunate//
///
> In summary, my personal opinion is that we should ask ICANN to wait 
> before granting its approval until after a consultation is carried on 
> and until Ethos/PIR have cleared their position vis-à-vis taking 
> binding commitments about their future behaviour in the Public Interest.

/See all comments above. There is no way to hold Ethos to account. As I 
said on the CPWG call, we should be anticipating that ICANN will approve 
the deal and asking for some contractual protections that would protect 
end-users. //
/

> As for the questions to ISOC I would expect the ISOC Chapters - in 
> particular those who are active in ALAC - to express their opinion on 
> the sale.
/They might be wondering if that would endanger their funding. Although 
some chapters have done so, ISOC has not done anything to make chapters 
feel comfortable pushing back.//
/
> //
> Cheers,
> Roberto
>
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