China’s “Horror Hotel”

China’s Public Security Bureau has just ordered all hotels in Beijing and Shanghai —including the most well known U.S.-owned brands— to install government software that spies on all Internet traffic by hotel guests coming to watch the summer Olympic games. The goal is not only to spy on foreign media but also to chill any plans for demonstrations or communications between China’s dissidents and foreign officials. The hotel owners are naturally outraged; however, if they refuse to comply they are essentially signing a financial death warrant.

The Chinese government has warned of financial penalties, suspending access to the Internet, or the loss of an operating license for any hotel that tries to buck the system. Welcome to the quicksand that is the Chinese Internet. The outrage is well placed but hardly unexpected; earlier this year the U.S. State Department warned travelers to the Olympics that “they have no reasonable expectation of privacy in public or private locations” in China. The fact that China is now reneging on its promise to allow a free media and an open Internet during the Olympics is hardly a surprise. Early on the Chinese assured the Olympic Committee that “Internet censorship” would be lifted for journalists during the Games.

Now the open Internet extends only to sites related to actual Olympic competitions. Freedom to report, a senior Olympic Committee official said, “didn’t necessarily extend to free access and reporting on everything that relates to China.” The disappointment is that the International Olympic Committee isn’t even pretending to put up a fight. The lesson here for U.S. companies doing business in China is not that China engages in pervasive censorship and surveillance of its Internet, or that it cannot be trusted to keep its promises. Rather, it is that all companies providing Internet or technology-related services – even in the enterprise computing area – need to be mindful of the risks; it’s not just the major Internet brands like Google, Microsoft and Yahoo being targeted.

Big or small, technology-related businesses need to be mindful of the risks posed to the rights of their customers, and be prepared to take meaningful steps to protect those rights. With only a week to go before opening ceremonies, it may be hard for hotels to resist China’s surveillance demand, but before the hotels simply acquiesce they should band together to ask the IOC to do its job and insist that the host country not indiscriminately spy on those attending the Olympic games. If the International Olympic Committee can threaten to ban Iraq’s athletes from participating in the games because of inappropriate government interference, surely there must be a sanction that can be threatened against China for reneging on a core promise that helped it secure the games in the first place. Some hotels are considering whether to notify their guests that their Internet communications are under surveillance.

Providing clear notice about the “spy-ware” installed on their networks will go some way toward guarding the rights of hotel guests. But no one attending these games should believe that any communication in any setting is private. My friend Rebecca MacKinnon, former CNN bureau chief in Beijing, has posted some tips for journalists and others seeking to navigate the shark-filled waters surrounding the Olympic games. If you are going to China and want to protect your rights, give these a read. But understand there is no fail-safe solution here to ensure that when you and your rights check in at a Beijing hotel, you can both check out.