At Last, China Targets Its Spammers


By Bruce Einhorn It has been clear for some time now that China is a major new battleground in the war against junk e-mail. From giants like Microsoft (MSFT) to small e-mail security specialists, companies that track the movement of spam over the Internet have been seeing an increasingly large volume of junk coming from Chinese servers (see BW Online, 05/17/04, "A New Chinese Specialty: Spam"). "Everyone is moving in," says Steve Chang, CEO of TrendMicro, the Tokyo- and Taipei-based antivirus company. "Suddenly everything is coming from China."

China is becoming such a popular place for spammers because of its loose regulations, which is ironic given that China is viewed by many in the West as a Communist regime determined to control content on the Internet. And it's true that Beijing doesn't hesitate to round up dissidents who post messages promoting Chinese democracy or the banned Falun Gong religious movement. But the government has shown far less interest in cracking down on people who send messages promoting cut-rate Viagra or low-cost mortgages.

SHORT ON DETAIL. Another problem is the rise of local-language junk mail. Some of the key antispam tools that American companies depend on aren't as effective against spam that's not in English, according to Chang. He estimates that 80% of the antispam software specialists are backed by American venture-capital money, so the focus is the U.S. Says Chang: "If you take that software and try to analyze Chinese e-mail, you always miss out."

Now the Chinese government and some top American information technology companies are teaming up and fighting back. Executives from America Online (TWX), eBay (EBAY), Microsoft, and Yahoo (YHOO) recently met with the Internet Society of China, a quasi-governmental organization that plays a major role in governing the Net in China. It was announced on Sept. 2 that a memorandum of understanding (MOU) had been signed that would help reduce the amount of spam sent out by Chinese servers to both Chinese and foreign Internet users.

The announcement had vague references to fostering discussion about spam with Chinese Internet companies, encouraging the adoption of antispam policies, and helping the government educate the public about spam. Because of the lack of detail, it's hard to say just how effective these measures will be. But some executives who participated in the talks told me after the announcement that they believe the agreement will help put a lid on Chinese spam.

GONE PHISHING. According to Jeff Bullwinkel, director of law and corporate affairs for Microsoft, there's clearly a need to take action not only in China but also in other parts of Asia. "We're seeing large volumes of Asian-language spam -- Chinese, Korean, and Japanese," he said. "That's reflecting that spam is a global problem, affecting computer users out here [in Asia]. The problem is increasing."

What might the MOU do to address the problem? According to Carl Hutzler, director of antispam operations for AOL, it has been difficult for Americans to work with Chinese Internet service providers (ISPs) because of the lack of official channels. While AOL works closely with ISPs in other countries, "we have not had as good a contact with Chinese ISPs," he said via phone from Beijing. Hutzler and Bullwinkel were among the U.S. executives who met with officials from the Internet Society of China.

Cross-Pacific cooperation is key, believes Hutzler, because once AOL has identified the source of spam attack, the outfit's antispam team needs to have speedy contact with the ISPs that are the source in order stop it and protect AOL users. Fast action is especially important since spamming often is accompanied by phishing, where identity thieves send bogus messages to try to respondents to give up personal information.

POWER, NOT PARADISE. "Usually the plan of attack for an ISP is to get the site shut down as quickly as possible to prevent people from divulging their personal information," Hutzler explained. "Being able to talk to the ISPs that are hosting the activity, to contact them quickly and get the site shut down -- that's a large weapon."

According to Hutzler, the hope is that the deal could break down some barriers and make it easier for AOL -- and other companies -- to work together with a Chinese ISP like state-owned China Telecom. "Let's say that AOL is receiving a lot of complaints from members that originated at an IP address from China Telecom. We want to be able to talk to China Telecom so it can identify a security problem and address it," he says.

Maybe Hutzler is right, and the antispam deal with Beijing will help. Clearly, it's part of a bigger effort by the Chinese to be seen as a responsible member of the global Internet community. With China already the second largest Internet country, after the U.S., the government wants to win recognition as an IT power, not as a spammer's paradise. While it wasn't too long ago that industry experts were quietly criticizing the Chinese government for its inactivity on spam, the Sept. 2 deal has given Beijing the chance to win praise for doing the right thing. "The Chinese government is very awake to this issue," says Microsoft's Bullwinkel.

"ARMS RACE." Some people say that the problem is actually not difficult to solve. According to Nick Hawkins, the managing director of Asia Pacific operations for MessageLabs, a British e-mail security firm, most of the spam coming out of China really comes from U.S. spammers taking advantage of insecure servers in the country. By taking advantage of these open-relay servers, the American spammers can get their messages out and avoid U.S. law enforcement. "If you have a server and you leave it open, it's like leaving the car keys in the car," says Hawkins. "If you close your servers down and don't allow open-relay, you take care of the problem."

Spammers have demonstrated that they adapt easily to challenges. The antispam moves from China may help, says Bullwinkel, as well as antispam technology from the big U.S. companies. "It is a bit of an arms race, though," he says. "We're working hard on filtering technology, but spammers are working hard to get around it." Adds Hutzler: "The war we're waging is a long one." But with the Chinese fighting on their side, there's now some reason for optimism. Einhorn is BusinessWeek's Asia Economics correspondent, based in Hong Kong


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