'Internet freedom' bill targeting China cooperation faces rough road

Editor's note: Updated at 5:50 a.m. PDT with comment from Yahoo.

A proposed federal law that would slap extensive regulations on technology companies doing business in China and other nations deemed to be unreasonably "Internet-restricting" is facing an uncertain future due to opposition from the Bush administration and telecommunications providers.

The House of Representatives bill says that search engines, Web e-mail services, and other Internet businesses may not place servers with user account information in those nations. Any "aggrieved" person anywhere in the world would have the right to sue U.S. companies in federal court.

It's no surprise that technology companies have not exactly applauded the Global Online Freedom Act, which also would require them to disclose censorship pressure from allegedly repressive regimes. Microsoft, for instance, has said that no new laws are necessary.

With public concern about human rights in China growing in advance of the summer Olympics, spurred along by trade and currency concerns, the uprising in Tibet in March, and a Senate hearing last week with executives from Yahoo, Google, and Cisco Systems, it seemed possible that Republican Rep. Chris Smith's proposal could become law this year. It already has cleared the hurdles of three House committees, thanks in part to enthusiastic support from the late Democratic Rep. Tom Lantos, and is awaiting a floor vote.

But stiff opposition from the U.S. Department of Justice--plus telecommunications companies that are concerned about the wording of the latest draft of the bill--is likely to imperil the legislation. In addition to the Justice Department, the U.S. State Department has sent a letter to House Foreign Affairs Chairman Howard Berman saying the bill would affect broader policy issues.

The State Department agreed to provide CNET News.com with a two-paragraph excerpt from that letter, which reads in part:

The Administration shares the view reflected in H.R. 275, the Global Online Freedom Act, that freedom of expression on the Internet must be protected globally. However, the bill's key provisions--calling for labeling Internet-restricting countries and penalizing certain affected U.S. firms in such countries--are likely to undermine U.S. diplomatic efforts and to interfere unjustifiably with such U.S. firms' commercial engagement in those countries. For these reasons, the Administration would oppose the bill, as reported to the House.

Meanwhile, a letter to Berman from the Justice Department dated May 19 that News.com obtained says:

The department foresees the potential to thrust United States businesses into an environment of conflict of laws and to create significant difficulties for the department in the administration of the bill's requirements, thus seriously compromising the attorney general's ability to work with foreign law enforcement agencies in an atmosphere of cooperation. Additionally, certain of the bill's provisions raise constitutional questions to the extent they would operate to constrain or jeopardize the president's ability to conduct foreign diplomacy, and to the extent they would operate to regulate the content of U.S. firms' expression in a manner vulnerable to First Amendment challenge.

Moreover, the bill's approach for securing personally identifiable information is one which the United States would likely not countenance if it were applied by foreign entities operating in the United States pursuant to the dictates of foreign law. Consequently, it is the department's view that the restrictions imposed by the bill may have the unintended effect of prompting foreign countries to preclude United States business from operating in their territories...The department opposes the bill as drafted.

Justice Department spokesman Erik Ablin said on Friday that no response had been received from Berman's office. Berman's press secretary told us in e-mail that: "This is a very important bill. Howard wants to carefully study its ramifications and so he is meeting with both the human rights groups and the business groups in that pursuit. He'll want to finish that process before he comments on the DOJ letter."

A report from Berman's committee cites, as justification for the legislation: "American companies have disclosed to security forces in repressive regimes the content of private communications and the identity of their Internet customers, sometimes leading to the arrest and conviction of political dissidents. In some cases, this cooperation has been done willingly and for profit. In others, it has occurred in response to subpoenas or due to the fear of sanctions imposed by local law."

For their part, human rights and journalists' advocacy groups generally support the Global Online Freedom Act. In March, they sent a joint letter saying they strongly support the measure because "decisions about what information can be disclosed would be made by the U.S. government, removing this burden from the companies involved" and that it should be enacted before the Beijing Olympics. It was signed by Reporters Without Borders, Human Rights Watch, the Committee to Protect Journalists, PEN USA, and the World Press Freedom Committee.

The letter points to the case of Shi Tao, a political dissident in China who in April 2005 was sentenced to 10 years in prison for "divulging state secrets." Shi Tao had e-mailed foreign reporters; the Chinese government tracked him down because Yahoo's Hong Kong China subsidiary in Beijing supplied an IP address.

Internet companies have had mixed responses to the Global Online Freedom Act, often declining to take issue with it publicly for fear of drawing criticism or attracting more attention to the legislation.

Cisco says it hasn't "taken a formal position" because the bill could change and it will "examine" the final language.

Google spokesman Adam Kovacevich pointed us to a statement from last week and added: "We support the Global Online Freedom Act because of our deep belief in and commitment to Internet freedom. We believe that this legislation can be improved further to help ensure that people around the world have even greater access to as much information as possible, and we will be sharing our thoughts with Congress in the weeks ahead."

Kovacevich would not elaborate on what improvements Google wanted to see made to the bill.

A Microsoft spokeswoman said her company would still prefer not to see legislation in this area.

Yahoo spokeswoman Tracy Schmaler said the company supports some of the "key principles" of the bill, such as creating an office within the State Department charged with leading the way against Internet censorship. But the company continues to negotiate with members of Congress to come up with a version "that will help create a better environment for online freedoms without preventing companies from engaging in these emerging markets," she said.

One recent source of opposition came from Internet service providers, who have told Berman they are alarmed at a blanket of regulations aimed at covering U.S. companies providing "Internet communications services." That term does not appear in the version of the Global Online Freedom Act posted on the Library of Congress' Thomas Web site; it does, however, appear in a subsequent version that has not been publicly circulated.

News.com's Anne Broache contributed to this report.

Update 5/28 1pm PT: Fixed name of Yahoo's subsidiary