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I have Zscaler service installed on my system and it does a good job of filtering content and malicious websites.
I was wondering how does Zscaler manage to do this? I read that it creates a PAC file that is saved on your system which contains the policy to divert requests.
Would be great if someone could explain the process flow and technology behind it?
Based on ZScaler Client Connector Help > Getting Started > What is Zscaler Client Connector? it creates on desktop devices (Windows, MacOS) a local network adapter where all traffic passes through:
How does Zscaler Client Connector work?
...
When you install Zscaler Client Connector for PC, a Zscaler Network Adapter is also installed on your user's computer. When the user connects to the web, the network adapter captures web traffic from that device.
While it does not use the term "VPN" here in the context of desktop devices it is essentially similar to a VPN. This also means that it affects all traffic on the machine, not only traffic from the browsers.
With mobile devices it even specifically says that a VPN is created:
When you install Zscaler Client Connector on a mobile device, ...
... The device then establishes a local VPN tunnel that captures application traffic and directs it to Zscaler Client Connector on the device.
