Gates, other CEOs blast US government encryption policy

Chief executives of some of the top US software companies say they are frustrated over the country's current encryption policy, claiming it has become a major impediment to the development of electronic commerce and security on the Internet. Eight IT leaders, including Microsoft CEO Bill Gates, spoke at an industry forum to lobby in favor of legislation that would loosen US encryption laws, which currently prohibit the export of encryption software stronger than 56-bit key technology without a waiver from the US Department of Commerce.

Chief executives of some of the top US software companies say they are frustrated over the country's current encryption policy, claiming it has become a major impediment to the development of electronic commerce and security on the Internet.

Eight IT leaders, including Microsoft CEO Bill Gates, spoke at an industry forum to lobby in favor of legislation that would loosen US encryption laws, which currently prohibit the export of encryption software stronger than 56-bit key technology without a waiver from the US Department of Commerce.

The software executives say the U.S. policy is flawed because of the widespread availability of encryption software outside the U.S. The industry leaders appeared at the third annual CEO Forum hosted by Business Software Alliance, an industry association based here.

The group of executives also met yesterday with U.S. Attorney General Janet Reno and Federal Bureau of Investigations Director Louis Freeh to make their case for changing the policy.

The meeting included a "frank and direct" exchange, Gates said, adding that the software leaders told the government officials that the encryption policy is fundamentally flawed.

"A key point of discussion in the meeting, which we've been clear on all along, is that encryption technology is widely available outside the U.S. and inside the U.S.," Gates said. "If it's a question of, can the genie be put back in the bottle, the answer is no."

The executives agreed to have another meeting with Freeh and Reno soon, Gates said.

The software executives declined to discuss the meeting with Reno and Freeh in detail. But they indicated that their lobbying efforts would continue during their stay in Washington, saying they would be meeting with elected officials here.

The software executives said they would meet with supporters of legislation that would change encryption policy, including U.S. Senators Patrick Leahy, a Democrat from Vermont, John Ashcroft, a Republican from Missouri, Conrad Burns, a Republican from Montana, and U.S. Representative Zoe Lofgren, a Democrat from California.

The executives -- normally fierce competitors -- said no other technology issue has united them the way the encryption policy issue has.

"This encryption thing is turning into a real crisis, and not everybody understands why," said Eric Schmidt, chairman and CEO of Novell Inc.

"We appear to be running a jobs export program -- why would we want to do this?," Schmidt said.

The competitiveness of the U.S. economy in the 21st century "is being determined by an issue that is in front of us and we are not taking care of it," he said.

Legislation has been introduced in both the U.S. House and Senate to change encryption policy but none of the executives on the panel indicated any optimism that the legislation would become law by the end of the current U.S. Congressional session. [See, "Legislation to Change U.S. Encryption Policy Given Long Odds," June 8. ]

Government officials fail to understand the basic point that even 128-bit key encryption software is available to be downloaded by anyone sitting at a network-connected PC, according to Jeff Papows, president of Lotus Development Corp.

The industry leaders said that the root of their frustration is that foreign companies are seizing the opportunity to export encryption software in the absence of controls from their own governments.

The executives also voiced strong opposition to any attempt by the U.S government to impose a key escrow system on the use of encryption software, saying such a system would cost billions of dollars.

A key escrow system would be akin to a massive "white pages" telephone directory, said Gordon Eubanks, president and CEO of Symantec Corp. The directory would have to be available around the clock to government authorities and updated within seconds of any change.

Such a system could cost as much as US$38.5 billion over five years, according to a study that the executives released today during the forum meeting.

"If you let it (the system) be run by government who here thinks it's going to less rather than more?" Eubanks said.

The other problem with such a key-escrow "white pages" is that criminals would go unlisted, said John Warnock, chairman and CEO of Adobe Systems Inc.

There is currently much behind the scenes political maneuvering going on as various proposed legislation makes its way through Congressional committees, noted Representative Bob Goodlatte, a Republican from Virginia, after the forum meeting. [See, "With Legislation, End of Encryption Debate Nears," June 5. ]

But despite the frustration of the software executives and elected officials who support changes to encryption policy, Goodlatte said he is "not lacking optimism."

"It's an important time for these folks to make their case," said Goodlatte, noting that the clock is ticking on the issue. "Another year or two and this battle is lost."

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