Report: Rules don't stop U.S. companies from restricting Internet overseas

Current laws and corporate codes of conduct aren't preventing Western tech companies from colluding with repressive governments around the world, according to a report released on Tuesday by a Canadian security firm.

"Most companies have acceded to China's demands for information control, seeing this as the price of doing business," concluded the report by SecDev Group, which researches global security issues and has a hand in providing software used by the U.S. government to overcome international Internet firewalls. "This choice has often led to concrete instances where the companies have aided and abetted human rights abuses."

Some of America's largest companies have been caught up in controversy over their work in China, which has millions of tech-savvy citizens.

Last year Google pulled out of the Chinese Internet search market after earlier agreeing to abide by censorship rules. Yahoo was criticized as well after it handed over private user data. And Microsoft, Skype, and Cisco are still being scrutinized by human rights activists.

"Many of the companies concerned have taken refuge in the grey area between national and international standards to justify their defaulting to local compliance," according to the report, titled "Collusion and Collision: Searching for Guidance in Chinese Cyberspace."

Cisco, specifically, is facing legal challenges to its decision to sell the Chinese government $100,000 worth of routers and switches that eventually became part of the government's Internet blocking system.

"Complying with local regulations is evidently a necessary part of doing business in any jurisdiction," the report said. "However, if those local regulations contravene commonly held and even self-declared values, this signals a problem. Companies are clearly struggling with how to navigate the censorship terrain while staying competitive at the same time."

Although companies have tried to self-regulate, the report concluded that there are few controls or guidelines on how to behave. SecDev noted that voluntary codes of conduct, including the Global Network Initiative, have been largely unsuccessful, and laws are limited.

The report specifically cited the proposed Global Online Freedom Act, which would block U.S. companies from doing anything to restrict the Internet overseas.

"The Act has not been finalized. It does however appear to fall neatly in line with the Obama administration's policy," the report said. "If a promising version of the bill is passed, it will be a step in the right direction."