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Wouldn't this mean setting up a VPN on the phone and having all traffic routed through mobileadblock.com's servers?

In this day and age of NSA, privacy and spying - not sure too many users will be up for that.

In long term for normal users, when they use public WIFI for example, its safer because they have to trust one party instead of all users of public WIFI. If people are willing to use Google Chrome bandwidth savers, this could work. But you are right, all traffic is routed through mobileadblock servers.

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