Don’t Rush to Pre-Install China’s Spyware

Posted on June 18th, 2009 by admin in Political Economy

We have been concerned about the effect on the PC business in China due to a recent action to require all PCs sold there to pre-install spyware accessible by the Chinese government. So we asked an expert on Chinese business and intellectual property law to help decode the situation.

Mei Gechlik (JSD, MBA) is Lecturer in Law at Stanford Law School, where she also is Microsoft Rule of Law Fellow. She is fluent in Mandarin and knows the Chinese business scene. She has generously agreed to let us publish her analysis of the recent action by China. Here it is.

By Mei Gechlik

Stanford University

18 JUNE 09

Earlier this month, China’s Ministry of Industry and Information Technology (MIIT) made available a notice dated May 19 to require that from July 1, all personal computers (PCs) sold in China be preinstalled with a program that, according to the MIIT, filters harmful information.  The notice has drawn widespread criticisms that the Chinese government attempts to invade privacy and restrict freedoms in the name of creating a “healthy and harmonious Internet environment”.  Should PC producers rush to meet the requirement by July 1?  No.

First, the MIIT’s notice is, like many other Chinese rules, vague.  It does not specify that penalties will be imposed if the “Green Dam Youth Escort” (Green Dam) software is not preinstalled by July 1.  It only provides that any failure to meet the requirement should be corrected (改正, gai zheng).  Rushing to comply with such a poorly drafted and once secretive notice sends a wrong signal to the MIIT that PC producers do whatever it takes to increase their share in China’s PC market, which sold 40 million PCs last year and is the second largest in the world.  PC producers’ speedy compliance without any attempt to seek clarifications from the MIIT would encourage the MIIT and other ministries to take more drastic steps at their whim, leading to a more challenging business environment for local and foreign enterprises.

Second, the MIIT seems to have backed off because of growing pressure inside and outside of China.  In China, many netizens have questioned the MIIT’s ulterior motives of forcing every PC user to have a program that can, according to experts, turn every PC in China into a part of a botnet, a network of hijacked computers that the hijacker can manipulate.  Even people working for government-run institutions have openly expressed their concerns.

In particular, Li Fangping, a Beijing rights defense lawyer, has formally challenged the legality of the MIIT’s notice.  His main argument is that the notice concerns vital interests of the people and the failure of the ministry to hold a public hearing on the issue violates an October 2008 directive jointly issued by a few ministries including the MIIT and approved by the State Council, China’s highest executive organ.

Li further relies on China’s rules on open government information to demand the MIIT to, among other things, make public the “financial application and approval procedure” for spending RMB41.7 million of government funds to purchase the right to use Green Dam for one year.  At issue is that the MIIT entered into a contract with Jinhui Computer System Engineering Co., the developer of Green Dam that is linked to the People’s Liberation Army, China’s military, without going through any transparent bidding process.

Li also asks the MIIT to explain whether ordering all PC producers to install the software may have violated China’s Anti-Monopoly Law.  The law prohibits administrative authorities from abusing their power to eliminate or restrict competition.  Why is Green Dam, the effectiveness of which is challenged by experts, picked when the market offers other anti-virus software that can effectively block harmful information?

Pressure outside China takes the form of not only criticisms against the Chinese government’s Internet censorship but also lawsuits against Jinhui.  Solid Oak Software Inc., a California company, has alleged that Green Dam contains components stolen from its software and vowed to stop U.S. PC producers from shipping computers with Green Dam to China.

In an attempt to alleviate concerns, the MIIT spokesman has reportedly clarified that PC users can choose to uninstall Green Dam.  It remains unclear whether the MIIT will revoke its May 19 notice.

It is not unusual for the Chinese authorities to back off from their unreasonable stances after strong public opposition builds up through the Internet and the media.  In 2003, the State Council abolished the notorious “custody and repatriation” system to stop condemnations spreading rapidly across the country after a young migrant who failed to present ID documents was beaten by the police to death when he was locked up to be repatriated to his home town.  Earlier this week, a local court decided to set free a young woman who killed an official and wounded another to defend herself from a rape attack.  The woman was first arrested for murder.  Had the incident not been extensively covered by the media and the Internet, the court decision would have been different.

Given that the MIIT is subject to such enormous pressure, PC producers inside and outside of China should seize the opportunity to add their voices.  Apart from legal arguments, they should remind Chinese leaders that a highly-controlled Internet system is not conducive to the proliferation of ideas needed if China is serious about becoming an innovative country by 2020.
Twenty years after the 1989 crackdown of the student protest at the Tiananmen Square, Beijing has yet to review the crackdown and correct its own mistakes.  Instead, it continues to restrict freedoms in the name of creating a harmonious society.  Chinese leaders should know from history that China was the strongest when its society was tolerant, not when it was harmonious.

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