Nearly every US company with a Web site located in China will have to move it elsewhere or its executives would face prison terms of up to a year, according to proposed legislation expected to be introduced this week in the US Congress.
A draft version of the bill reviewed by ZDNet UK sister site CNET News.com represents the first serious attempt to rewrite the ground rules controlling how US Internet companies may interact with foreign governments. If enacted, it would dramatically change the business practices of corporations with operations in China, Iran, Vietnam and other nations deemed to be overly "Internet-restricting".
The highly anticipated proposal, created by Christopher Smith, a New Jersey Republican from the House of Representatives, in response to recent reports about censorship in China by Google, Yahoo and others, also makes it unlawful to filter search results or turn over information about users to certain governments unless the US Justice Department approves. It would also impose new export restrictions to those nations.
"For the sake of market share and profits, leading US companies like Google, Yahoo, Cisco and Microsoft have compromised both the integrity of their product and their duties as responsible corporate citizens," Smith said at a related hearing in the House on Wednesday. Smith, chairman of a human rights subcommittee, likened that cooperation to companies that aided the Nazis in World War II.
Yahoo spokeswoman Mary Osako and Cisco spokesman John Earnhardt said their companies were still evaluating the draft. Google and Microsoft did not respond immediately to requests for comment.
During Wednesday's hearing, politicians predicted that this bill would be introduced in the next few days, perhaps even as early as Thursday. Elliot Schrage, Google's vice-president, expressed cautious agreement with the broad principles of this approach, leading some subcommittee members to jest that the search company should be listed as a joint sponsor.
It's unclear what the prospects are for the legislation, titled the Global Online Freedom Act of 2006. While the measure is likely to draw support from some politicians from both major parties, no companion version currently exists in the US Senate, and election-year politics could complicate efforts to enact it anytime soon. Also, the proposal puts American businesses at a severe competitive disadvantage with China-based firms, which are immune from such rules and can locate servers in China and offer much faster response times for Internet users in that country.
Broad definitions
In addition, the draft bill — time stamped Tuesday at 6:16 p.m. ET — could face opposition from a broader alliance of US companies because it is written so broadly. The requirement that Web sites be moved away from Internet-restricting nations applies to any business with a site that responds to a query by displaying "information available on the Internet" — a broad definition that seems to sweep in any search box that accepts textual input and offers a list of Web pages in response.
The media watchdog group Reporters Without Borders, which Smith cited as an influence when drafting the legislation, said it has not reviewed the 26-page measure. The worldwide press freedom organisation has called for similar laws that would, for instance, prohibit search engines from incorporating automatic filters to reject phrases such as "democracy" or "human rights."
"Our first reaction would be that hopefully this hearing and all this congressional and media attention is going to push the companies themselves at some point to regulate themselves," Lucie Morillon, who testified in Wednesday's hearing on behalf of Reporters without Borders, said in a telephone interview with ZDNet UK sister site CNET News.com. If that industry self-regulation fails, she warned, then legislation is necessary — it's "the only thing left."
Besides the relocation requirement, Smith's proposal says that:
Infractions can be punished, depending on the exact prohibition violated, by fines of up to $2m (£1m) and criminal penalties of up to five years of prison time.
The Electronic Frontier Foundation, a digital rights advocacy group based in San Francisco, published its own letter to politicians this week suggesting parameters for an industry-wide code of conduct — saying, among other things, that "American companies should not be actively and knowingly providing services that facilitate censorship or repression."
Danny O'Brien, EFF's activist coordinator, said the organisation generally supports the idea of legislation requiring such practices and agrees with many underlying principles in Smith's draft bill. But he said he feared the "kind of specific regulation" in Smith's proposal would undermine the industry cooperation that the government seeks.
"I think there are sometimes situations where these corporations in dealing with a foreign government sort of need the backup and support of the US government, and I think this bill rather paints these companies as enemies to be controlled," O'Brien said.
For instance, the draft bill would require Internet companies to provide the US government with lists of all content and sites it has been forced to block by restrictive governments. "Now that puts the companies exactly where they don't want to be, which is in a fight between the US government and the other governments," O'Brien said.
CNET News.com's Anne Broache contributed to this report.
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