

Screenshot of vb.ly on its launch day. Photo by violet.blue on Flickr. Some rights reserved. Used with permission.

Over the years Libya has been notorious for many things, including its links to the Lockerbie bombing and the often bizarre activities of its leader, Muammar Gaddafi.

Now, those have spilled over onto the internet, where western companies which have been buying domain names with the trendy suffix ".ly", owned by Libya, have abruptly begun to wonder whether they have made a wise decision in basing their business around it.

That follows the abrupt enforced shutdown of vb.ly, a "link shortening" site run by Ben Metcalfe and Violet Blue, after it was declared that the content of the site was "against Sharia law".

An image of Violet with bare arms, drinking from a bottle of lager, was emblazoned across the front page of the site when the government-owned Libya Telecom & Technology got in touch earlier this month. "Pornography and adult material aren't allowed under Libyan law, therefore we removed the domain," the letter said, adding: "The issue of offensive imagery is quite subjective, as what I may deem as offensive you might not, but I think you'll agree that a picture of a scantily clad lady with some bottle in her hand isn't exactly what most would consider decent or family friendly at the least."

But other moves made by the ministry could threaten the business of another web startup, bit.ly, which has had millions of dollars of investors' money poured into it – including funding of $10m (£6.3m) received earlier this week – following the announcement in June by the Tripoli regulator for domain registry that domain registrations with fewer than four characters were restricted for use by registrars "having presence" in Libya – that is, based in the country – where they would be under local Sharia jurisdictions.

Metcalfe, 29, contends that his site – which was running for 13 months until last week – does not host pornography, but adds that the worrying issue is the censorship of domains that channel user-generated content. "We're very clear that the site did not have pornographic or adult content hosted on it; but even if we did, my bigger concern is that [the Tripoli .ly domain regulator] domain registry is trying to regulate against the content of a website. A domain and a website are two extricably decoupled and separate entities," he told the Guardian.

The trend for .ly addresses has grown in the last year as part of a practice known as "domain hacking". With memorable names in the ".com" space hard to come by, many companies have instead chosen to incorporate the domain name into their brand. Sites like Bit.ly, Ow.ly and Ad.ly have raised millions of dollars in investment.

But the government in Tripoli has strict rules on the use of the internet, and regularly filters out political websites critical of the pesident, Muammar Gaddafi. The Guardian understands that some investors in bit.ly were unaware of the connection with Libya when in negotiations to invest.

In the rules for buying a .ly domain, owners are warned by Libyan Telecom & Technology that they must comply with the country's laws.

"Domain names must not contain obscene, scandalous, indecent, or contrary to Libyan law or Islamic morality words, phrases or abbreviations," say the regulations. That means sites linked to gambling and sexual activity are banned, but the LTT also reserves the right to suspend a service if it believes it promotes immoral behaviour or criticises the government.

Earlier this year the Libyan government blocked access to YouTube after videos of an anti-government demonstration were published on the site. Meanwhile a study by the OpenNet Initiative, which monitors online censorship, said filtering was still an issue. "The government blocks oppositional websites and arrests and imprisons cyber-dissidents," it said, adding that "self-censorship remains widely practiced by both online and offline media for fear of government retribution".

Bit.ly may be safe from a Libyan clampdown: the Registry Office deems it a "URL shortener for general uses". Like vb.ly, it provides shortened links (such as http://bit.ly/guardiantech) which when clicked will redirect users to websites with names too long to be used on web services such as Twitter's 140-character system. Millions of links are made via bit.ly every day, and it is only believed to filter them for malicious spam.

Vb.ly appears to have contravened its terms of use by billing itself as "The internet's first and only sex-positive URL shortener". Libya warned that the site was in violation of the domain registry code when it first launched in August 2009, though the pair insist that the terms were not set out anywhere, and so vb.ly was allowed to continue operating.

Earlier this year a clampdown on independent news media in the country led to fears that progress in the area was being reneged upon. Now, after internet companies flocked to buy web addresses ending with .ly, human rights campaigners have warned that they may be making a mistake.

Harvard law professor Jonathan Zittrain, co-director of the Berkman Center for the Internet and Society, who has written extensively about internet censorship, called the situation "weird". "[It is] particularly stupid to host metalinks like bit.ly there", he added.

Alicia Navarro, the founder of online marketing company Skimlinks, runs another URL shortening service called Good.ly which donates 55% of its profits to charity. She said that it was Bit.ly's success had encouraged her to pick a Libyan domain – and she hoped that any problems that arose as a result would be dealt with by larger organisations.

"We chose a .ly domain because the use of such a domain had been pioneered by bit.ly, and therefore we thought it would help people see us as a URL shortener," she told the Guardian in February.

Navarro told the Guardian this week: "We have been abreast of these developments in Libya. Again, however, we aren't concerned. The clampdown has been targeting domains less than four characters, and focusing on sites that are breaching Libyan laws – that is, sites condoning sexual behaviour.

"Our site is four characters in length and is supportive of charities, so is unlikely to be targeted for closure, at least at this stage. However, it is a peripheral part of our business so even if it did get closed, it would have no impact at all on our business.

"My worry would be companies like bit.ly whose entire business relies on their domain name."

In February an Amnesty International spokesman told the Guardian that while the organisation would not support a boycott of Libyan domains, companies using .ly websites should carefully consider the implications of relying on a government that censors websites like YouTube and forbids criticism of its leader.

"While Amnesty takes no judgment on business acumen, we do say that companies should undertake assessments into the likely human rights impact of their business decisions and use their influence with governments to raise human rights concerns of which they become aware," he said.

"We've also encouraged companies to have robust human rights policies in place."

Although there is no suggestion that data on these websites is being kept in Libya or monitored directly by the authorities there, there is concern that companies have started building brands based on Libyan domains without thinking through the potential issues.

One investor told the Guardian in February that he had put money into a .ly company without even realising that it was registered via Libya.

However Andrew Cohen, the bit.ly service's general manager, said in February he foresaw no issues with using a Libyan domain. "We picked the name bit.ly because it's short and evocative of small, loosely coupled bits ... bit.ly is a shorter URL than bitly.com, which we also use," he said.

Cohen added that the Libyan government signed an operating agreement in 2007 with Icann, the body that oversees internet names around the world.

"Icann sets a standard for responsibility and reliability, and we have confidence in their framework," he said.

But while that system is intended to resolve issues such as trademark disputes, it remains unclear whether it could protect from Libyan law intended to suppress free speech or silence critics of Gaddafi.

See also: where in the world are those link shorteners taking you?