China's VPN Crackdown: Huge Implications For Multinationals Including Apple And Whatsapp

China’s Security Council seems bent on expanding internet restrictions nationwide. Following new legislation in June this year, the crackdown has been swift: even major firms such as Apple and Whatsapp are on the chopping block. The recent ban on VPNs has huge implications for multinationals and the foreign employees that they hire.

For years, the use of virtual private networks (VPNs) to get beyond China’s “Great Firewall”, the government system that censors online users’ access to blocked foreign content, has been the country’s worst kept secret. By 1 February 2018, these cracks will have been closed – or at least be much, much harder to find. Last month, Chinese regulators ordered telecommunications providers to block access to VPNs by early 2018, representing the latest move against internet freedoms amid the Communist Party’s ever-tightening grip on online activities.

Compliance has been swift. Apple has already removed applications for VPNs from its Chinese app store, despite widespread outrage from global human rights advocates. Having already tightened rules for VPNs in 2015, Apple chief Tim Cook defended the company’s decision to remove the apps. “We would obviously rather not remove the apps, but we follow the law wherever we do business”, he said, during an earnings call for Apple’s quarterly financial report. Amazon has also been the subject of derision, after the firm’s Chinese partner, Beijing Sinnet Technology, contacted clients to advise them to delete the anti-censorship tools. China Telecom, China’s biggest internet service provider, has advised corporate clients that future VPN use will only be permitted for the use of contacting a firm’s headquarters abroad.

President Xi Jinping has overseen a significant expansion of China’s cyberspace regulation, introducing strict new data surveillance and censorship laws. It is only through the use of VPNs that businesses and their employees are able to access foreign search engines, Gmail accounts, and a host of otherwise blocked social media outlets- including Facebook, Twitter and Youtube. Regulators also routinely block sensitive content, such as searches for the 1989 Tiananmen Square protests, or coverage of the recently deceased Nobel laureate and activist Liu Xiaobo. They have even been known to scan chat apps such as Whatsapp, intercepting messages and images in real time. With the Communist Party Congress scheduled to occur in autumn, efforts to consolidate power in the country are expected to lead to further increases in controls.

Multinational firms have a checkered past when it comes to navigating Chinese online censorship. In 2005, Yahoo was forced to make amends after complying with Chinese regulators’ demands to identify pro-democracy advocates using Yahoo online message boards. By contrast, Google has pulled out entirely from the country in a stand against censorship and invasion of internet privacy. In a country of 650 million internet users, the move has no doubt been a costly one. China’s hotel and service industry has tended to provide government-approved VPN services to business travellers in a bid to facilitate often necessary communications with the world beyond the firewall. Following last month’s announcement, it seems that this service, too, will be forced to end.

- Advertisement -

It is not yet clear how this new drive against China’s VPNs will unfold. Apple’s Cook has stressed that the firm has removed some, but not all, apps. It may well be that China’s Ministry of Industry and Information Technology only intends to regulate the industry, rather than remove it entirely. Still, the move is bad news for internet users across the country, and by drawing attention to the regulatory challenges of doing business in China, this most recent crackdown may even prompt some firms to consider relocating their operations. Nearby Taiwan, already a thorn in China’s side given its staunch insistence on democracy, open internet and political independence, provides a viable alternative.

Furthermore, it is not just the technology sector that will have to adjust. At best, the new restrictions increase the uncertainty and frustration of commercial operations. At worst, China risks derailing global collaborations in all sectors, from academia to agriculture, hurting its economic growth.

 

Joanna Eva is a Political Risk Analyst at Global Risk Insights. As originally appears: http://globalriskinsights.com/2017/08/china-great-firewall-looms/

This column does not necessarily reflect the opinion of the editorial board or Frontera and its owners.

- Advertisement -