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You are a business man, right? You of all people really think that we would publish any information about this on the Net?
YES. If this was my business, here is what I would give as a statement.
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Due to the volume of accounts from (Country) that have abused our free service, we have had to block 99% of the IP ranges from (Country). Of the 2000 accounts opened from (Country), 1600 of them have abused or broken the TOS in some way or another. There are no other countries that have a total of abusive accounts anywhere near the 1600 found from (country), and therefor no other country has had this ban put on them. This is only a temporary measure, but we feel the need to do this to protect our server security. We are sorry to all none abusive members from this country, and hope you understand our reasons for doing this. We are working on a way to fix this problem and return our normal service to (Counrt) as soon as possible.
Thank you for your understanding on this matter.
I would have made this statement before I imposed the ban, therefor answering all questions about the matter before they were asked. Anybody reading that would agree that your business had good reason to impose the ban, and would not have take offence at you doing so. As it stands all your company has said is that 80% of users from Israel are abusing your service, so you banned them all. A few simple facts like number of accounts compared to other countries, would show why you had to do it. As it stands the worlds eyes are looking at this and seeing a racist/discriminating policy.
As for the rest of your reply:
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Also I think people do not understand that we are the ones providing the service and as such we are the ones who decide whether to distribute it in a certain country/to certain individual or not
This is true, but saying that doesn't explain why you decided to ban whole countries.
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It is not us who should be blaimed for the situation, we changed data centers several times and ruined our business relation with several companies because of our policy to accept everyone, but now this is over
So you are saying that these other companies all requested that you ban Israel from your severs? And that your reputation has been ruined because you didn't ban Israel?
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We must protect ourselves from abuse and we will.
Yes I agree, but there are ways of doing things correctly, and what has been done (racist or not) is not the way to do it.
You will now see that your company, and this story, is popping up all over the net (and other media). Bad press is what you are getting now, and this will do more harm than any abusers of your service ever could