BlackBerry Leaving Pakistan Market Over Privacy Concerns

The Pakistani government's demand to begin to soon monitor all BlackBerry email and SMS messaging traffic prompted the company's pullout.

BlackBerry, Priv, smartphones, Pakistan, security, privacy, BlackBerry Enterprise Server, SMS messages, email security

BlackBerry is exiting the Pakistan mobile communications marketplace on Dec. 30 after the country's government said it would begin to monitor all email and SMS messaging traffic over BlackBerry's servers.

The Pakistani government's action, and BlackBerry's decision to pull out of the country in response, was announced by Marty Beard, the company's chief operation officer, in a Nov. 30 post on the Inside BlackBerry Blog.

"While we regret leaving this important market and our valued customers there, remaining in Pakistan would have meant forfeiting our commitment to protect our users' privacy," Beard wrote. "That is a compromise we are not willing to make."

The move comes after the Pakistan Telecommunications Authority in July told mobile phone operators in the country that BlackBerry's BES servers "would no longer be allowed to operate in the country starting in December 'for security reasons,'" wrote Beard. "The truth is that the Pakistani government wanted the ability to monitor all BlackBerry Enterprise Service traffic in the country, including every BES e-mail and BES BBM message. But BlackBerry will not comply with that sort of directive. As we have said many times, we do not support 'back doors' granting open access to our customers' information and have never done this anywhere in the world."

The Pakistani government was not making the move for public safety reasons, but was instead "essentially demanding unfettered access to all of our BES customers' information," wrote Beard. "The privacy of our customers is paramount to BlackBerry, and we will not compromise that principle."

The move to try to monitor communications over BlackBerry servers was Pakistan's only target at this time against the company, wrote Beard, but BlackBerry's response will be broader. "Although the Pakistani government's directive was aimed only at our BES servers, we have decided to exit the market altogether, because Pakistan's demand for open access to monitor a significant swath of our customers' communications within its borders left us no choice but to exit the country entirely."

Amid efforts to transform its company from a hardware maker to a security and software business, BlackBerry continues to turn in disappointing financial results, with non-GAAP revenue of $491 million for its fiscal 2016 second quarter, down 47 percent from $916 million in the same period a year ago, according to an eWEEK report in September. BlackBerry reported a non-GAAP loss for the quarter of $66 million after adjustments, which resulted in a loss of 13 cents per share. The second quarter ended Aug. 29. The second-quarter revenue was down from the $658 million posted in the first quarter of 2016.

Also in September, BlackBerry confirmed rumors about its first-ever Android smartphone and unveiled the Priv, a new privacy-targeted Android-equipped smartphone that it hopes will help it reclaim some of its lost hardware market share.

The Priv went on sale through AT&T on Nov. 6, starting at $249.99 with a two-year contract. The Priv features a 5.4-inch curved glass touch-screen display, a 1.8GHz Qualcomm Snapdragon 808 hexa-core processor and 3GB of RAM. The smartphone includes a slide-out QWERTY keyboard, an 18-megapixel rear-facing camera with a special Schneider-Kreuznach lens and dual flash, a front-facing 5MP camera, 32GB of onboard storage, a microSD slot that accepts cards up to 2TB for expanded storage and a 3,410mAh battery. The handset runs on Android 5.1, and its display is covered with protective Corning Gorilla Glass 4. The key focus of the Priv smartphone is its inclusion of high-end enterprise security features that have been found in BlackBerry devices for years. Even the name of the phone is an abbreviation of the word "privacy."

In April, BlackBerry launched its $275 touch-screen Leap smartphone, which replaced the traditional BlackBerry physical keypad with a touch screen aimed at getting the company's devices into the hands of younger mobile professionals. In December 2014, BlackBerry launched its $449 BlackBerry Classic smartphone, which followed closely behind the company's unveiling of its $599 BlackBerry Passport smartphone for enterprise users in September 2014.

In March, the company announced that by the end of 2015 it will offer much of its software that today runs on its BlackBerry smartphones for use on Android, iOS and Windows smartphones and tablets as it looks to broaden its reach into the enterprise, even when companies are using competing devices. The project, called the BlackBerry Experience Suite, is seen as a way for enterprises and small businesses to bring enterprise-class applications to their end users from a trusted partner such as BlackBerry.