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Can the VPN industry win the battle against online regulations?

Dominik

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Can VPN's win the online regulation

Whether VPNs can win the battle against online regulations is as loaded of a question as they come. Because the outright answer is a resounding “no”, but no one whose understanding of Internet technologies exceeds the “it’s magic, duh” level is actually looking for a definitive, ultimate truth.

It all depends whether you’re an eager customer, fledgling business, prospective client, developer, or if you fit a more specific combination of those roles. Then, there’s the question of jurisdiction and how any particular one applies to your case. But it all starts with the service actually being offered in exchange for currency.

Global VPN legality in principle

That is, are VPNs legal and could VPN usage get you in trouble? Due to being a relatively new invention (relative to human civilization), VPNs are way too young to be encompassed by negative on a significant scale. Meaning the question you should really be asking is: “has this government made VPNs illegal?”

Modern practicing democracies have not, as you might suspect, and the other answers get more complicated the deeper you delve into systemic attempts at obfuscating autocracy – especially those that are still ongoing, which most are.

A revealing, if one-dimensional, thought exercise is whether you can replace “VPNs” from the aforementioned questions with any item protected by the Universal Declaration of Human Rights; that is, if doing so changes anything for the better.

VPN regulation

VPNs as a way of exercising human rights

It goes without saying that VPNs are way, way down the list of polarizing things some countries regulate to any extent. Granted, the UN has been saying Internet access itself is a human right for years by now. But its flagship treaties, the ones with signatures from all members… aren’t likely to follow suit. Not that such a formality would accomplish anything on its own.

One argument that’s recently been gaining traction in advocacy circles internationally is the interpretation of VPNs as essential tools for exercising one’s fundamental right to individual privacy and protections thereof. Some good news is that as of late 2019, more than 80 countries around the globe have codified individual privacy rights into their constitutions. In terms of applicable scenarios, this level of legislation carries a significantly greater weight than an international treaty. That’s largely because its theoretical limits are inseparable from its sovereignty, which clears the way for enforcement.

Practical considerations of VPN protections

Much of that theory has yet to be tested, but e.g if your country is a signatory sponsor of the aforementioned treaty, chances of it doing a 180 by not just banning VPNs but defending that decision in a constitutional review isn’t something that has a realistic chance of happening.

A practical check of VPN legality, then, would be to search for related legislation currently applicable to your jurisdiction of interest. Which may be as simple as typing “are VPNs legal in country_no_24” into your URL bar before hitting Enter, but probably isn’t, in large part because a crackdown on VPN usage is counterintuitive in the eyes of authoritarians.

Again, all things tend to be legal – until they aren’t. And governments with vested interests in preventing successful VPN usage prefer to do even more by controlling the medium instead of outright outlawing it. Why blind yourself to those most opposed to you instead of exercising soft power over their tools?

VPN regulation losing priority during pandemic

Assuming some aspects of everyday life will never revert to how they were prior to the outbreak of COVID-19, tensions fueled by VPN regulations of any kind are likely to rise. Because the stay-at-home reality that billions have been living over the last half a year is unsurprisingly boosting individual VPN usage in the West. That is, the Great Lockdown hasn’t pushed many Westerners to premium VPN services they weren’t already paying for, but most are making the most of their subscriptions since social distancing measures started in February.

In addition to bigger issues drawing regulatory focus away from VPNs, any perceived urgency for new legislation in the segment is a highly contentious matter. Regardless of whether we look at a country in which VPNs are largely unregulated, regulated, or on a spectrum between heavily regulated and illegal, the adoption of such software is rarely uniform.

Perhaps the only somewhat universal exception to that would be large-scale enterprise-class use cases; banking, general finance, and the like embraced multi-layered encryption protocols with failsafes many years ago already. That’s even true of China, one of the most systemic opponents of intended (read: lacking in encryption backdoors for the good guys) VPN usage.

Of course, some markets always prove quicker to adopt VPNs over others, with that rate usually being proportional to how heavily regulated a given segment is, in general. But while laws can be a deterrent, no industry is immune to one of the most universal effects of heavy-handed governing – growing numb toward such constantly growing disincentives. Especially if opposing them is some prospect of making money.

Today’s state of VPN regulations: from unfair to insane

Better said: while few governments currently oppose the very concept of VPNs, most of them tend to enact legislation that ranges from unfair to insane, with sensible laws being much more of an exception than a rule wherever you look.

An extreme example of such a ludicrous regulatory framework would be the massive gray hole that is China, as we already covered it in our is it legal to use a VPN in China article. You see, while Beijing certainly isn’t thrilled with how VPNs enable silly things such as freedom of speech and government criticism, China didn’t become the world’s second-largest economy by ignoring technology. VPNs are hence essential tools in countless industries in the Far Eastern country, yet their overall legal status can be described as tragically crippled at best.

After realizing a true VPN ban would put it at a severe cybersecurity disadvantage, China opted for making providers subject to state licenses. Meaning you have to submit to a mandatory government probe lasting as long as its inspectors want it to, focused on whatever areas those officials are interested in, meeting as many compliance requirements as they list, and hoping all of that will be enough for them to bless your desire to start offering a service largely aimed at avoiding such scandalously invasive government overreach.

Oh, and you can only host your infrastructure on servers within the country which the government can likely access at will but on the off chance it’s unable to, you’ll be expected to fully cooperate with any state request in total secrecy. China is, therefore, definitely not a good place to be as far as legitimate VPN tech focused on individual privacy is concerned. Which isn’t to say you can’t find any of those, as Hong Kong protesters and countless other dissidents can confirm. Major overseas companies such as ExpressVPN and NordVPN have been playing a bizarre game of server “whack-a-mole” with the Chinese governments for many years now and show no intention of stopping. That state of affairs is yet another illustration of how crucial VPN technology truly is in the Information Era, how its very fundamentals allow it to thrive in even the most hostile regulatory climates.

The niche side of VPN value

Not every problem solved by VPNs has to be global, mind you; this technology has been successfully supporting innumerous niche communities for a long while now, with most of its applications coming down to maximizing the bang netizens are getting for their software-as-a-service bucks.

Netflix unblocking is possibly the best-known example of such utility, but there are dozens of other, much more specialized VPN platforms with tens of millions subscribers that you’ve never heard of. Take, for example, the San Francisco-based Crunchyroll which amassed a community of 60 million anime fans sick and tired of being unable to access content due to regional licensing.

An even smaller – though arguably more lucrative – niche which would be in deep trouble without VPNs is online gambling, both in terms of betting services and virtual casinos. Naturally, this stalemate of a position comes down to the root of all evil – taxes. Because governments are greedy and it’s not like bureaucrats are lacking in locals dead set on running an online casino.

As a result, more than half of globally recognized countries currently impose restrictions on online gambling and just over 90 implicitly allow such entertainment; that is, without imposing systemic licensing burdens. About one in four nations employ extremely heavy-handed gambling regulations, but as Woodrow Wilson can attest, vice regulations bordering on prohibition are a fundamentally flawed concept that will always fail in the long run. They’re a textbook example of cure-is-worse-than-the-disease scenario.

Speaking of online gambling, specifically, nothing underlines the futility of outright bans on overseas casinos like VPNs do. Why would you turn to a local bookie to bet on e.g. Italian lottery and experience the wonders of double taxation when a $5 VPN subscription allows them to access legitimate, EU-regulated services offering the same thing at half the price? Especially when most regulation focuses on proactively blocking access to foreign gambling websites instead of penalizing people adamant to circumvent their restrictions, which reduces this whole controversy to a censorship issue.

If China can’t stop particularly stubborn dissidents from mocking its overlord with Winnie-the-Pooh memes through encrypted connections, how could someone like the Indonesian government possibly hope to prevent people from placing sports bets with foreign companies?

In many cases, online casinos and similar businesses are also battling with outdated regulations, which are still preferred to modernized prohibition in the vein of what the UK has been doing since the turn of the century. Again, any government opposition to such businesses isn’t hard to understand – few would be thrilled with the idea of having foreign firms cannibalizing their honest-to-God vice economy, but it’s up to them to find the balance between taxation and zealous protectionism. Until then, countless players are just fine with using VPNs to access superior gambling platforms, clearly signaling how inferior they find local alternatives to be. That’s kind of the whole point of globalism and the Internet economy, in particular.

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