Are Chinese Companies Buying Opera’s VPN Business?

By Editor
February 18, 2016

A consortium of Chinese companies, including Qihoo 360 and Kunlun, have proposed to fully acquire Opera, a Norwegian browser provider, for NOK10.5 billion, which is about USD1.23 billion.

Along with some businesses related to advertising technology, Opera is much more than just a Web browser company. Opera is also getting into the security game, and it is the owner of Canada-based virtual private network provider SurfEasy. The VPN company joined Opera’s portfolio in 2015.

Qihoo 360 is a technology security company that also provides a popular browser in China. Many foreign media continue to incorrectly report that VPN services are illegal in China. This is not factual information, and VPN services are used legally by a range of Chinese universities and companies in China, and the services are sold by both Chinese technology titans like China Telecom, Diyixian, and Huawei, and also foreign businesses operating in China like Cisco. So VPN services are definitely available and sold and licensed legally in China.

Confusion about the legality of VPNs in China relates to the personal VPN products used by netizens in China. These VPN services are usually run by companies operating outside of China, and these companies lack business registrations in China. Only a small handful of these VPN companies have legally registered branches in China to conduct VPN services. If foreign firms are able to find partners or register their companies and services in China, then they can legally provide services in to Chinese netizens.

While armchair Sinologists think of VPN services as solely circumvention tools, the largest market for VPN services is in North America and Europe, where VPNs are useful for privacy on wireless networks and for connections to office and school computer intranets. So Qihoo 360’s bid for Opera is also a bid for grabbing the large share of privacy aficionados who rely on Opera technology to stay safe and private.

But herein lies a problem. Will security-minded foreigners continue to use Opera products if those products are owned by a Chinese firm? Huawei, Xiaomi and ZTE face criticism outside of China for security issues. Qihoo 360 is smart enough to understand that it will probably lose some of its global Opera users after the acquisition. So then why would it buy Opera? Perhaps it needs the patents and technology to gain a stronger global foothold for the future.

According to a statement from Opera, its board of directors has decided to recommend its shareholders to accept this proposal. Opera’s board said shareholders who agreed to accept the proposal held a total of 33% equity of Opera. Opera has been seeking an acquisition since 2015.

Other companies involved in this acquisition included Golden Brick and Yonglian Investment.

Opera is an old browser vendor from Norway and its product has a history of over 20 years. Opera supports many PC and mobile platforms and its market share in the desktop browser market outside of China was about 2%, ranking fifth following IE, Firefox, Chrome and Safari.

Commenting on the acquisition, Opera’s Chinese joint venture subsidiary Opera China said that it would not affect the development of the company and they would maintain independent operation and business expansion.

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