(Bloomberg) -- The technology company Sandvine has announced an overhaul of its business model and a change in leadership following years of criticism over its sales to authoritarian governments.
The company has stopped operating in 32 countries and plans to exit another 24, where it had determined that the “threat to digital rights” was too high, it said in a statement Thursday.
Chief Executive Officer Lyndon Cantor also will step down and be replaced by a manager with “human-rights focused leadership,” the company said.
Sandvine had been in a state of crisis since February, when the Commerce Department placed it on a blacklist for providing “mass web-monitoring and censorship” technology to the Egyptian government. The blacklisting had hampered its ability to win new clients and prevented it from receiving crucial technology components from American suppliers.
“In response to concerns regarding the misuse of our technology by foreign governments, we made a commitment to new ownership, leadership and business strategy,” the company stated Thursday, adding that it had taken those steps after consultation with the US Department of Commerce, the US Department of State, and other members of the government.
Sandvine said it has a new board and plans to adopt a new name in 2025. It will donate 1% of future profits to organizations dedicated to protecting internet freedom and remediating human rights abuses, according to the statement.
The tech firm specializes in what’s known as deep-packet inspection technology, which can be used for innocuous purposes, such as to block out spam and viruses. It can also be deployed to shut down citizens’ access to millions of websites and messaging apps and to carry out covert surveillance of internet activity.
Sandvine said in its statement on Thursday that it had responded to abuses of its technology in the past through legal and technological methods. However, it had concluded that, “such steps are not enough, and what is required is a more dramatic shift in the markets in which we operate and in the way that we do business.”
The company said it would now focus on winning customers only in democratic countries.
In 2020, Sandvine was the subject of a Bloomberg News investigation which revealed the company’s deals with autocratic governments, including in Belarus, Egypt, Eritrea, the United Arab Emirates and Uzbekistan. The company’s equipment was used in more than a dozen countries to censor content on the internet, such as by blocking independent news or social media websites, Bloomberg News reported.
“This is a positive result,” said John Scott-Railton, senior researcher at the University of Toronto’s Citizen Lab, which published its own reports on the abuse of Sandvine’s equipment in Egypt and elsewhere.
“Until a few years ago we had the evidence of harm, but not models to stem the reckless proliferation of harmful surveillance technology,” said Scott-Railton. “Now, there’s evidence that the US approach packs a punch and can disrupt the industry. Sandvine’s woes underline the point.”
Originally founded in Canada, Sandvine was acquired by US private equity firm Francisco Partners in 2017 and combined with Procera Networks in a deal worth $444 million. In August, Francisco Partners announced that it was no longer the owner of Sandvine.
Some first-lien lenders to the company took ownership following a restructuring, according to people familiar with the matter, who asked not to be named discussing private details. Sandvine didn’t respond to a request for comment on the change.
--With assistance from Jill R. Shah.
(Updated to include additional context in eleventh, twelfth and fourteenth paragraphs)
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