Software Makers See a Market in Censorship
January 16, 2010
By DAN LEVIN
BEIJING — While China’s censorship policies are prompting Google to consider quitting its operations in the country, some technology companies see the restrictions as a golden business opportunity.
More than a million people in China, including human rights activists and expatriates, are using special software to circumvent the nation’s complex online censorship system, known as the “Great Firewall.” This has created a booming market for software companies, which are capitalizing on the growing desire of China’s Internet users to fanqiang, or scale the wall, to visit Web sites like Facebook, YouTube and Twitter.
“More and more Chinese people know how to use this software now,” said Teng Biao, a lecturer on law at the University of Politics and Law in Beijing, who recently discovered that his Gmail account had been hacked, apparently by someone interested in his involvement in human rights issues. “It’s very convenient and easy to use. The government can’t fully control people browsing the Web.”
Although the technology is not banned outright in China, it is often the focus of censors, who aim to shut down sites that give users access to the software.
The number of people using proxy servers, virtual private networks and other computer tools to skirt barriers to banned information online is not growing just in China. The United Arab Emirates, Iran and even Australia are seeing a surge in customers willing to pay for the freedom they offer.
Companies are cashing in on that desire, selling their products to users on a monthly or yearly basis or offering free software and charging advertisers to reach a captive audience.
Bill Bullock, chief executive of Witopia, a Virginia-based company that sells a VPN popular among expatriates in China for $60 a year, said he had seen annual sales double worldwide since the product was introduced in 2005.
“People want their Facebook and Twitter and they’re not going to tolerate a watered-down Internet,” he said. “They’re far from home, and this is their connection to family and friends. They’ll do anything to make sure it works.”
VPNs were originally developed to give customers and businesses a secure way to log on to corporate computer systems and in public places like coffee shops and airports. VPN software lets users “tunnel” through to a server in a country without Internet restrictions and encrypts information under an anonymous computer address to prevent monitoring. Proxy servers also allow unfiltered Web browser access but are less secure than VPNs because they do not conceal other computer information.
Computer users in places like China are becoming savvy at leveraging the technology to outwit restrictions.
“Once they have a taste of good old capitalism, they just want more,” said Mr. Bullock. “You can’t put that genie back in the bottle.”
New entrants are jumping into the market with an eye on China’s 384 million Internet users. The U.S.-based Open Terrace introduced a VPN, Freedur, last April just as the Chinese government began a censorship campaign that eventually blocked Facebook, YouTube and Twitter.
“That’s when the VPN industry just exploded,” said Chris Matthews, co-owner of the company. At first, Open Terrace offered a free one-month trial membership that was downloaded by 7,000 Web users in China. But when developers noticed that the Chinese government was blocking Web sites for free VPNs, the company ended the trial offer and increased monthly rates to $20 from $6, which actually bolstered sales.
“If you’re offering anything for free, you’ll be blocked in China because locals will flock to your service and use it,” he said. “The Chinese were using and blogging about our free trial, and that’s of course how the Great Firewall team learns who to block.”
The Chinese government’s zeal for censorship has not stopped some entrepreneurial developers from offering free services.
About one million people in China are using the free VPN Hotspot Shield each month, out of a total of 7.5 million worldwide users, according to David Gorodyansky, founder of the U.S.-based AnchorFree, which offers the software.
In exchange for free use, viewers see an ad on every Web page they look at. That’s 50 million page views a month in China alone and a billion worldwide, Mr. Gorodyansky said. Hotspot Shield has created a new type of prime real estate on the Web for advertisers, and a bonanza for AnchorFree. The company has become profitable since its debut in 2005 with $11 million in venture capital and has seen the total number of users grow 500 percent in the past 18 months.
He traces the recent boom in users worldwide to government censorship of the Internet, including Iran’s closing of Twitter after the 2009 presidential election and Georgia’s barring of Russian-language Web sites during the country’s 2008 war with Russia. “It’s amazing how you can look at our traffic and map it to different events happening throughout the world,” he said.
Governments have begun to fight back. Many users in China complain that Hotspot Shield often fails to load and the software's download Web site is now blocked, although users can obtain it on 40 other unrelated sites. Outfoxing governments intent on shutting down any access to banned information is a constant battle, and those repressive efforts are spreading. According to Reporters Without Borders, 60 countries censor the Internet, up from 37 in 2008.
Last month, Australia announced plans to filter offensive Web sites from overseas, like those with child pornography. But a recently leaked blacklist showed that YouTube links, legal pornography and some Wikipedia entries had also been banned. The United Arab Emirates blocks pornographic and anti-government material.
“It will always be a cat-and-mouse game,” said the founder of ConnectionVPN, who asked not to be identified for fear of retaliation by governments opposed to the company’s software. “We always have to keep ahead of the technology so we can be ahead of the censors.”
ConnectionVPN made its debut last fall and says about 30 people, including many in China, are signing up for the service every day, which costs €5, or $7.20, per month. Many in the industry say they are seeing a major change in the use of the technology as censorship becomes more widespread. “We’re at a shifting point,” said ConnectionVPN’s founder. “Until now, this was a niche market in a few countries, and now it’s becoming a global problem.”
Such developments may bode well for developers, especially in China. Google’s possible exit from the country, and the potential loss of its Gmail and other services, will only drive more interest in software that can scale the firewall, said Tian Hou, an Internet and media equities analyst at Pali Capital in New York.
“There has always been a culture in China to help people get around the Communist Party’s restrictions,” she said. “The Internet is no different.”