Privacy vs Profits: The false dichotomy of commercial anonymity

I often overhear comments such as "You can't trust commercial anonymity networks, all they care about is the bottom line." This is a common thought, because it makes sense. For the most part, that is true. I don't think you can trust most commercial anonymity services, nor should you. From what I've seen, all but two others stink right on the surface, no telling what goes on behind the counter. But that isn't what they are getting at. For some reason, people become suspicious when money is involved. Maybe they are thinking "If you'll take payment to protect me, will you take a little bit more to spy on me?" A valid concern, but let us step back.

Do you distrust a lawyer to defend your interests, because you pay them? Do you suspect a doctor of foul play, because there is a bill? Of course not. They are there to do their job. Infact I posit that they have more to lose because you are paying them. Their reputation is on the line, they have a duty to fulfill their obligation, and hopefully word gets around if they "rat you out". But again, such a statement begs the question, why does the bottom line get in the way of trust?

First lets examine the situation: Commercial anonymity networks, versus free anonymity networks. A free anonymity network is run by unknown individuals, who may or may not collude, may or may not be monitoring your exit-node traffic, and who owe you nothing. In fact, they give up their bandwidth, which could be generosity, or could be due to ulterior motives. They are inherently prone to attempts of spying, some traffic analysis, and have even been "theoretically" compromised due to technical attacks such as Sybil. I think a strong point they have is that they are difficult to observe, since there are 1000+ nodes in the Tor network. I2P has its own great things it can boast, I think their network is designed to be unobservable, but apparently isn't quite ready for the big time. When a subpoena is served or police show up, the user may get hassled, but they probably didn't keep logs, and they aren't a single entity, and there is no guarantee of the target using that network again, even if you could track them. So in essence, the user's identity isn't known by the person who gets investigated.

Commercial anonymity networks would typically be run by a single entity. Most of them are run from the USA, which is itself a bad idea. By running, I mean the firm is incorporated, and the principle owner(s) reside, in the USA. The risk is to the corporation itself. This is because the hazardous jurisdiction may make the firm, or the principles who control the firm, come under pressure to violate their oath (promised or implied). A specific example is the situation where e-Gold had not only it's assets confiscated, but the law firm that was supposed to protect the trust which held the assets also caved under governmental pressure, and finally the owners themselves live in the US. For all intents and purposes, it was a US company, despite its foreign registration. So we know the risk that a firm endures, but how does that transfer to the customer? Via moral hazard.

The moral hazard in this instance is the trust that the customer places in the firm. Due to assymetric information, the firm is inherently subject to a dilemma:

"Do we immediately comply with requests for data about our customers, or do we protect them and investigate if the claim has merit, and say NO if it doesn't?"

For firms located in the US and the UK, the dilemma has a built in answer: They have no choice. Their assets will be seized and the people involved will be arrested and imprisoned for obstruction of "justice" or some other charge. There are very few who are willing to go to jail for what they believe in, especially for someone else they've never met. So they have a different dilemma:

"Do we keep doing business and hope nobody finds out we are spying on our customers, or do we close up shop?"




Unfortunately, they may not have a choice in this situation. They may feel compelled by the powers that be to keep operating as a honeypot for the agency to drop by and collect the flies that get stuck. Or in the case of e-Gold, they openly and pro-actively worked with the FBI, without demanding proof that the customers involved are actual criminals. Of course, they do not have the prerogative to demand proof, as the governmental authority of that jurisdiction was involved. So this sort of situation could happen, or may already have happened, to many of the privacy providers located in risky jurisdictions. This bitter pill is sweetened by the fact that the firm under pressure can keep making money, and pretend that the horrible situation never happened. Such tactics are often used by police who pick up drug-dealers, turn them, and get them to become informants. For e-Gold, it didn't turn out as well. They cooperated completely, and they were still pillaged and accused. The message should be clear to providers of controversial services: It is not in your long-term interest to cooperate; but people don't live day to day by long-term decisions.

So what is the solution to a bad situation? Don't get in that situation in the first place. Don't do business with poorly structured commercial anonymity services, especially those that operate out of legally risky jurisdictions such as USA, Canada, and the United Kingdom. If you are using them, stop. Even though you aren't doing anything illegal, by using their services you could be volunteering your data to observation and snooping. A little paranoid? Maybe. But I would rather err on the side of precaution, when nobody really knows what either hand is doing. What would I personally suggest? Investigate the anonymity services out there. Find out their reputation, and what jurisdiction they are formed in. Ask their customers what they think, and take it all with a grain of salt.

Steve