April 25, 2016

Complicating matters: VPNs and Chinese censorship laws

Opera Software's new VPN feature may affect the outcome of a merger deal with Chinese Internet companies.

In February, a consortium of Chinese Internet firms, including Qihoo 360 Technology and Beijing Kunlun Tech Company made an over $1 billion acquisition offer for Norway-based technology company Opera Software. This offer has been thoroughly approved by Opera's Board of Directors, though its deadline for acceptance has been extended until May 24.

"There is strong strategic and industrial logic to the acquisition of Opera by the Consortium," Opera CEO Lars Boilesen said in a company press release. "We believe that the Consortium, with its breadth of expertise and strong market position in emerging markets, will be a strong owner of Opera. The Consortium's ownership will strengthen Opera's position to serve our users and partners with even greater innovation, and to accelerate our plans of expansion and growth."

Despite this potential merger, Opera recently announced a new virtual private network feature to its desktop browser, which will allow its users to browse websites that are region-restricted, protect their browser while accessing public Wi-Fi and search the web with more privacy. While this feature is for the developer version and may be beneficial for many of Opera's users, China is known for its strict censorship policies and sophisticated censorship mechanism. How this group of Chinese Internet firms respond to this latest VPN feature is less than certain.

What does this new VPN feature do for users?
This tool makes Opera the first major operator to directly install VPN access into its browser. Featuring 256-bit encryption, users will be able to hide their IP address, unblock restricted firewalls and websites and secure their personal information while using public Wi-Fi.

"Everyone deserves to be private online if they want to be," Krystian Kolondra, senior vice president at Opera, said. "By adding a free, unlimited VPN directly into the browser, no additional download or extensions from an unknown third-party provider are necessary. So, today, our Opera desktop users get a handy way to boost their online privacy, as well as easier access to all their favorite online content no matter where they are."

How will this release affect Chinese censorship laws and the potential merger?
Opera CEO Lars Boilesen stated that this installed VPN feature is "completely unproblematic" for regarding the future of Opera's merger by the group of Chinese firms, according to Reuters. Though the deal is yet to be approved by Chinese and U.S. authorities, Opera remains confident that the new VPN tool will not affect the outcome of the deal.

"Regarding China we already have servers in China and are running this through a Chinese IT company which is in compliance with Chinese laws," Boilesen explained. "China is not a huge market for us on desktop. So this launch has nothing to do with China."

At this moment, both Chinese firms have declined to comment regarding how and if this new feature will change the terms of the deal, according to Reuters.

Less than pleased Opera officials
While many are applauding Opera's latest development release and potential merger, others are less than pleased. Entrepreneur Jon von Tetzchner, who founded Opera in 1994, left his position as the company's chief executive in 2010 following ongoing disagreements with the Board of Directors. Despite his disengagement, he still remains profoundly impacted by the proposed sell of Opera, citing that it is troublesome that yet another "Norwegian company will disappear."

"Opera was a company with fantastic possibilities," Von Tetzchner told Aftenposten, Norway's largest newspaper. "The value of the company lay in the technology we developed. Instead of continuing with that, management chose to focus on digital advertising."

Erik Harrell, Opera's chief financial officer and chief strategy officer, also recently resigned to pursue other career opportunities, according to Reuters. Exactly how and if his resignation relates to recent developments at Opera has not been confirmed as of this moment in time.