Technology is unveiled for safer Internet use Small Md. company, 3 giants seek to set encryption standard

A group of computer giants -- and a small Howard County firm -- announced a plan yesterday to speed development of Internet-based commerce by equipping personal computers with powerful encryption technology to shield credit card numbers and other sensitive data from hackers.

Beginning next year, Hewlett-Packard computers will come with encryption technology built into chips produced by Intel Corp. Microsoft Corp. said it has begun to sell software designed to work with the more powerful encryption devices and to make its more advanced operating systems work with software programs that build in strong cryptography.


Technology developed by Glenwood-based Trusted Information Systems Inc. is central to the deal. TIS' software will allow the mathematical formulas that unlock the strongest encryption to be stored with a private company or individual, where government officials armed with a subpoena or warrant can get the "key" that decodes the program. That ability is essential to gaining U.S. authority to export strong encryption. "We enable encryption to be exported. By making it exportable, we make it universal," said TIS Chief Executive Officer Stephen T. Walker. "We're changing the Internet from a neat place to play to a safe place to do business."

The alliance was made possible when the Clinton administration backed down last month from its "Clipper Chip" proposal, which critics charged would have required that the keys to most modern encryption technology be given to the government. The administration had contended that officials needed the authority to keep terrorists and international criminals from using strong encryption to conspire online without fear of law enforcement detection.


Instead, the administration adopted a policy to approve exporting nearly any encryption program, so long as the key to the code is held by a private company or person and is accessible to government officials who can establish that they have a legal right to see it.

Hewlett-Packard Co. and the other companies hope to license what they call the International Cryptography Framework to other computer makers, so it will eventually become standard equipment on most personal computers at a cost of a few dollars.

"Unless you encrypt your information, it's very easy for electronic eavesdroppers to take a look," said Microsoft Senior Vice President Brad Silverberg.

Walker said the technology announced yesterday will make it "hundreds of millions of times harder than it is now" to steal information in transit between Internet users.

The problem with electronic commerce has been convincing customers that their information is safe while it is traveling through wires between their computer and its destination. For most consumers, that means credit card numbers. But for commercial users, the information at risk can be anything from privileged legal documents to secret product designs.

Some encryption software already has been commercially available, but compared with the new technology, it's relatively weak. For example, the popular Netscape Navigator Internet browser has relatively weak encryption that Walker said a determined hacker could crack within a couple of weeks.

But programmers who have long known how to build stronger encryption have been stymied by U.S. export law. They have not been able to sell strong encryption solutions within the United States while telling international customers that they couldn't buy the latest technology.

The result has been that encryption -- and Internet commerce -- have been slow to catch on.


The market for Internet commerce is expected to grow extremely quickly over the next several years, with business users adapting to the new technology much faster than consumers. Hewlett-Packard cited a study by the Boston-based Yankee Group which estimates that businesses will buy $134 billion worth of goods and services annually over the Internet by 2000, while consumers will buy $10 billion.

"Why not buy a Gucci wallet from the store in Florence, where they have the biggest selection?" Hewlett-Packard Chief Executive Officer Lewis E. Platt said at a Washington press conference. "People can feel as safe putting their personal financial information on the Internet as in a safe-deposit box."

Yesterday, Wall Street was betting hard that all that buying and selling would leave a healthy cut for TIS. The company's stock rose $5.375 to $15.375 on volume of nearly 1.3 million shares.

"This is part of a long plan for us," said TIS Executive Vice President Homayoon Tajalli. "We want to be part of any crypto engine that goes out."

The companies' move to push Internet commerce while allowing the government access to information so it can enforce the law drew praise from the White House yesterday.

"The administration is very pleased that major companies are moving forward," said Heidi Kukis, a spokeswoman for Vice President Al Gore. "If the technology announced today lives up to its promise, it's going to be very good for the country, both in terms of promoting the export of encryption products and in terms of protecting our country's national security."


Pub Date: 11/19/96