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The Business Behind China's Internet Real Name Registration System

One company stands to profit in a big way as China pushes forward with a policy to require Internet users to register their real names and their national identification numbers in order to participate online.

Beijing GZT Network Technology Inc. (北京国政通网络科技有限公司) is collaborating with the Ministry of Public Security to run the technical side of the country's real name registration system. Chinese local media have reported that there is tremendous business interest behind the policy and GZT will hold a monopoly on the identity verification business once real name registration is implemented.

The Chinese national legislature approved the real name registration system in December 2012. Some websites, such as popular microblogging site Sina Weibo, already have the system in place but most users have not verified their real name yet. The new law aims to make it mandatory for all major portal websites to require that their registered users verify their identity by June 2014, according to a document issued by the State Council [zh].

Real name registration will be implemented by June 2014 in China.

Real name registration will be implemented by June 2014 in China.

Beijing GZT Network Technology Inc. was founded in 2001 by Zhang Yi, whose family has military background [zh]. At first, the corporation's major business was related with e-government. In 2001, it helped 138 local government launched their online projects; in 2004, it helped 500 local governments set up e-governance projects.

Since 2004, it has become the major contractor for the Public Security Bureau's Citizen Identity Information Center project [zh], which is a nationwide system for the verification of a person's identity. By 2006, the system had the details of 1.3 billion individual citizens in its data base.

The Public Security Bureau's citizen identity information service has been open [zh] for the public to use since 2008. For example, an employer can confirm the real identity of an employee through the online platform for a five-yuan (one US dollar) service charge.

Beijing GZT Network Technology Inc. also opened another platform called ID5, which provides Internet users with the required verification code needed to register with websites that mandate real name registration by checking their ID information against the Security Bureau's database for identity verification [zh].

The ID verification process works like this: A user submits his or her real name and national ID number through the ID5 web platform, and the system verifies the ID number and generates a verification code that is sent to the user's mobile phone or email.

Local media estimated that ID5 would charge the online service providers (OSP) two yuan (0.40 US dollars) for the verification service. Once the OSPs receive a user's verification code, which is generated through the ID5 platform, the OSPs will connect with the ID5 platform and copy the user's registration details to ID5. Which means that a user's personal data will not be stored on OSPs, so if police need to check the identity of a user, they do not need to contact OSPs for the user's IP record of their posts. Instead, they can go directly to the ID5 platform to confirm identity details.

GZT has shot down the reports as a rumor [zh], but refused to explain to the public any pricing details, citing that it is “a business secret”. It is likely that pricing will be determined through negotiations with each individual OSP. According to current practice, the charge is between 0.5 yuan (0.08 US dollars) to one yuan (0.16 US dollars) per verification.

Either way, now that the number of Internet users in China has reached half a billion and each individual will sign up to several services, the profit generated from the verification service will be huge.

The corporation has already forged business partnerships with major web portals such as online media company Sina and Internet company Sohu for real name verification service. As the corporation has a monopolized status in China, once the real name registration law is fully implemented in June 2014, all major portal websites in China will be forced to verify the identities of their users by signing up for the ID5 service.

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