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How AnchorFree Scales China's Great Firewall


Its Hotspot Shield censor avoidance service gives users Web access they'd otherwise be denied

David Gorodyansky started AnchorFree in 2005 to help make Web surfing free and private in coffee shops, airports, and other places with wireless hotspots. He never predicted that five years later his company's biggest growth area would be people seeking ways to skirt government censors in China.

A growing number of China's 420 million Web users are turning to services that connect them to servers outside the country to gain access to sites blocked by China's extensive filtering software, known as the Great Firewall, says Ethan Zuckerman, a senior researcher at Harvard University's Berkman Center for Internet & Society. The proxy services, as these anti-censorship businesses are called, have become so common among China's educated class and Western expatriates that the fees they charge are sometimes referred to as an "Internet tax," Zuckerman says.

AnchorFree, based in Mountain View, Calif., runs a free, ad-supported proxy service called Hotspot Shield. Users download an application from AnchorFree's website that connects them to the Internet via a virtual private network, or VPN, similar to what telecommuters use to log onto an office network. Most computers connected to the Internet are assigned a unique number, or IP address, to route users quickly to the right destination. AnchorFree's software assigns an anonymous address that can be traced back only to the company and not to the user, according to Gorodyansky. "We send you on a virtual trip outside China," he says.

Lately there have been more reasons to circumvent China's Great Firewall. Access to several popular U.S. sites, including Twitter and Microsoft's (MSFT) Bing, was limited in summer 2009. Authorities had stepped up censorship in advance of the 20th anniversary of the Tiananmen Square protests, Xiao Qiang, director of the Berkeley China Internet Project, told Bloomberg News at the time. The issue gained exposure at the start of this year, when Google said it would stop filtering its search results in China.

As China's censorship has become more sophisticated, AnchorFree's popularity has grown. The company saw users of Hotspot Shield rise 159 percent over the past year, to an average of 8.52 million each month during the second quarter, as users in China more than doubled to 1.16 million in the same period. The company has also seen growth in Iran, Turkey, Georgia, and the United Arab Emirates—all known to filter websites—as well as Canada, where people use it to gain access to U.S.-only video site Hulu.

Part of Hotspot Shield's appeal is that it's free. Ads appear to users as a banner inside a frame that surrounds the user's Web browser. The company works with Yahoo! (YHOO) China to sell ads. AnchorFree says such ads have made its business profitable; the closely held company does not disclose revenues.

Hotspot Shield may eventually become a victim of its own success: The more attention paid to a proxy service, the more reason China's censors have to shut it down. These services aren't explicitly banned in China, though the authorities block access to them from time to time. "It's always going to be a cat-and-mouse game," says Austin Heap, who last year co-founded the nonprofit Censorship Research Center in San Francisco.

AnchorFree's website, from which the Hotspot Shield application can be downloaded, has been blocked in the past by the Chinese government, the company says. When that happens, the company finds alternative ways to distribute the program, such as e-mail. Users who can't get access to AnchorFree's site to download the program can e-mail win@anchorfree.com or mac@anchorfree.com to get an automatic response with the program attached. "We anticipate technological conflicts," says Gorodyansky.

The bottom line: With censorship in China tightening, locals and expats are turning to "proxy services" that give people access to Western websites.

With Vincent Ni/em>

Douglas MacMillan is a staff writer for Bloomberg Businessweek in New York.

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