Where do proxy companies take residential IPs from?

Entering behind the scenes of the proxy industry

Hi, I’m Julia Levi. As someone who’s been immersed in the proxy industry for years—first as a saleswoman at BrightData, then as NetNut’s VP of Sales for Asia and Eastern Europe, and now as co-owner of Data-OnTap.com, a reseller of the best proxy pools at the lowest prices—I know my way around this world. 

I’m also the co-founder of ByteConnect, an ethical SDK that powers proxy companies with IPs while providing customers with unbeatable no GB limit packages through PlainProxies.com. With all this experience, I’m here to answer one of the industry’s most frequently asked questions: How do proxy companies get their IPs?

If you’ve ever wondered about this, you’re not alone. Proxy companies seem to be popping up everywhere, making us curious about how they operate and what the barriers are to entering this game. Let’s dive in and break it down.

The Three Types of Proxy IPs

Broadly speaking, proxy companies sell three types of IPs:

1. ISP (Residential Static IPs)

2. P2P (Residential Rotating IPs)

3. Data Center IPs

While all three are valuable, today I’m focusing on P2P IPs (Peer-to-Peer), often referred to as residential rotating IPs.

These are the bread and butter of the proxy industry, and US P2P IPs have been the center of numerous lawsuits—check out BrightData’s legal battles (source) with just about everyone to see how contentious this space can get.  Sourcing, Selling and Using ISP IP’s verse P2P IPs, is very different.  The most successful proxy companies and most successful scrapers are selling/using P2P IPs for good reason.  

So, how do companies acquire P2P IPs?

The answer lies in real users’ devices — IoT devices such as mobile phones, routers, cameras, TVs, computers, and even smart refrigerators. But how do these devices become part of a proxy network? That’s where SDKs (Software Development Kits) come into play.

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The Role of SDKs in P2P IPs

To use a device’s IP, proxy companies need their SDK installed on it. This typically happens through apps that integrate the SDK. Once a user downloads the app, the SDK starts running, using a small portion of the device’s bandwidth and IP address. Building a usable, stable SDK is no easy feat. Some companies spend hundreds of thousands of dollars developing these tools. Entering the industry with your own SDK can be incredibly costly, especially if you outsource the development.

Once installed, the SDK pulls the device’s IP address to a server, that server then “proxifies” it. This allows the proxy company’s end user to run requests to the proxy server which in turn runs requests through the device using a small amount of its bandwidth. Think of it like advertising partnerships with apps, but instead of ads, it’s IP monetization. Apps earn money based on metrics like unique users per day or the total hours IPs are online per month. For app developers, it’s a less intrusive monetization model compared to ads.

Let’s address the elephant in the room: privacy concerns. Generally speaking, Proxy SDKs can’t control the device and don’t extract other data from devices—only the IP address and a tiny amount of bandwidth. For users with unlimited data plans, the impact is negligible. However, for those without unlimited plans, the costs could add up.

Fully Transparent Ways Proxy Companies Deploy SDKs

1. Transparency and Opt-Ins: Proxy companies partner with apps (like browser extensions, video streaming services, VPNs, or utility tools) that clearly inform users they’ll be sharing a portion of their bandwidth. Users actively opt in, and the SDK only runs when the app is in use.

2. Terms of Service (TOS): Proxy companies collaborate with apps or device manufacturers that mention bandwidth-sharing in their TOS. When users download and use the app or purchase the device, they agree to these terms, allowing the SDK to run and use their IP during app activity.

The “Other” Ways Companies Get IPs

Not all methods are above-board. Here are some of the less transparent practices:

1. Sticky SDKs: Some SDKs run continuously in the background, even when the app isn’t actively used. Users often don’t realize their device’s IP is constantly being used.  This may or may not be mentioned in the TOS. 

2. Hidden SDKs: In this case, the SDK isn’t disclosed in the TOS or app documentation. It runs silently in the background, utilizing the device’s IP without the owner’s knowledge or consent.

3. Router or SIM Card Farming: This involves setting up thousands of routers or SIM cards to generate new IPs. It’s not a scalable or stable solution, but it’s still used by some smaller players in the industry.

4. Botnets: This is where things turn outright unethical. A malicious APK containing an SDK is distributed as malware, turning infected devices into part of the proxy network. While there are rumors of big players engaging in this, the truth remains murky.

The “One App” Myth

Some companies claim they source all their IPs from a single app—think bandwidth-sharing apps like HoneyGain or PacketStream owned by big proxy companies. While these apps do bring in users, it’s unlikely they generate enough traffic to support the massive IP pools some proxy companies advertise. For anyone in mobile marketing, consider that even a very “sticky” app retains only about 15% of its downloaded users. It’s more likely these apps are just a front, with the real magic happening elsewhere.

If the proxy company you're working with doesn’t showcase having its own SDK or isn’t transparent about where their IPs come from, they’re most likely a reseller. Not that there is anything wrong with proxy resellers! Often, they can get you a better price than going straight to big proxy companies! Even if the proxy company appears to be transparent, there’s no guarantee you’re getting the full truth.  

At the end of the day, companies source IPs through various methods, and while some may prioritize transparency, others might not. Whether the less transparent methods are truly problematic depends on your perspective and priorities.— There’s really no way to know for sure and does it really matter? Is using a small portion of bandwidth truly that sinister? That’s up to you to decide.

Final Thoughts

The proxy industry is as fascinating as it is complex. From transparent partnerships to questionable practices, there’s no shortage of methods for acquiring IPs. As for barriers to entry, building an SDK is no easy feat, and getting apps to agree to partner with you is a full-time job, leading us to understand that there aren’t as many unique IP pools as there are proxy companies. 

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If you’re curious about proxies or looking for the best proxy packages in the industry, feel free to reach out to me on Telegram @t.me/Julia_ML123 and let’s keep the conversation going!

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