Understanding the proxy market
Like Adam Smith’s oft-criticized “invisible hand,” the best proxies play an almost imperceptible, yet influential role in the business world. Almost all of us interact with proxies every day, yet few understand the far-reaching implications of the technology.
Some skepticism about proxies is understandable; they have traditionally been used for niche applications, some of which would not be considered of the highest ethical caliber. While skeptical public perception continues to follow proxies, the best proxy servers are now considered an essential part of many business models.
Chief Executive Officer and co-founder of IPRoyal.
A simple technology with far-reaching benefits
In the simplest possible terms, a proxy is an internet-connected device that can pass traffic to another machine. Much of the same technological foundation is used for a better-known type of product: a virtual private network (VPN).
However, VPNs offer many benefits in terms of user experience, making the service easy to use for both consumers and businesses. Many of them today offer many additional services, such as protection against cyber threats.
Proxies would be considered a simple product by many consumers. After all, most proxy products consist of a range of IP addresses, ports, and some basic configuration options. Yet the same bare-bones nature of proxies makes them more modular.
Because of the way networks are established, each IP address carries additional information, such as its predicted location – something that is of great importance in some business applications.
All of these aspects create unique business applications for proxies. But they also make the same product largely irrelevant to everyday consumer use, leading to an environment where the general public never notices them while companies depend on the product.
That may be why proxies have an air of skepticism around them. If used properly, consumers will never notice that proxies are being used.
However, when something goes wrong, proxies will receive a lot of media attention. Because most of that attention will be negative, such a news cycle leads to an unintentionally pessimistic view of proxies.
Exposing proxy purchasing practices
Another area that remains hidden under a curtain of mystery is the procurement process. Because each proxy is obtained from a device that someone owns, specific software must be installed on that machine.
Purchasing practices differ depending on the proxy type, as they are largely determined by the nature of the device. Two of the most common and widely used types are data center and residential proxies.
Data center proxy purchasing has never been controversial. Data centers are collections of servers owned by the company. All a proxy provider has to do is sign a business agreement with the company.
However, residential proxies are obtained from consumer-owned devices such as PCs or mobile phones. Residential proxy acquisition practices vary within the industry.
We conduct our residential proxy purchasing through our sister company, where users can voluntarily turn their device into a proxy and receive a monetary reward. Some proxy providers have used other means, such as implementing software development kits in popular mobile applications.
An important aspect of any proxy is that it serves only as a traffic relay. No control over the device itself is given to the buyer and only absolutely necessary information about it is provided (such as type and location).
Once an IP address pool has been established, a proxy provider will typically perform cost analysis to determine the appropriate price for the product. Typically, proxies are sold per IP address or per GB of bandwidth.
Companies that purchase proxies then gain access to a certain number of IPs or the entire pool (if bandwidth is used). It should be noted that proxies are technically sold as a service and not a product. Ownership, management and many other aspects remain on the proxy provider’s side.
Part of the reason is that powers of attorney are just a means to an end. They can be used for legitimate, consumer-oriented purposes, but they can also be misused. As such, proxy providers will often implement strict controls, restrictions and risk management practices to minimize abuse.
Consumer-oriented applications
Aggregation of travel expenses: Rate aggregation is one of the most praised and well-known applications of proxies. Most of us have used these services to plan a business trip or vacation.
One of the key challenges is that travel cost data is location-based. Since there are users from all over the world, it would be difficult for a travel aggregator to collect accurate data for every possible location. With proxies, they can bypass the expensive process completely.
They can use a proxy that matches your location to collect precise data with automated tools. The process is then repeated as many times as necessary, all data is merged, compared and provided to the user.
Without proxies, it is unlikely that such a business model would be viable at all. But as I pointed out above, the use of proxies is completely hidden from the consumer.
Brand protection services: Counterfeit goods are surprisingly common. Online and peer-to-peer marketplaces make it difficult for companies to keep tabs on anyone who might be trying to sell counterfeit goods.
Automated data collection and monitoring processes are used to discover potential offenders on a wide range of websites. Because some of these websites are geo-restricted and only serve customers within a specific region, proxies become an essential part of data collection. Proxies also allow them to circumvent unintentional bans due to automation.
Conclusion
No one plans to keep proxies secret. But because they form the foundational layer of many practices and business models, consumers never come into direct contact with them.
All of the practices outlined above are just a small example of the different ways proxies are used, most of which ultimately benefit everyone. It is certainly one of the most interesting industries in several ways: it is treated as something suspicious, while it is beneficial for everyone.
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