Restrictions on the export of encryption technology cost U.S. businesses more than $100 million in lost business last year, Netscape Communications Corp. chairman James H. Clark said last week.
If the government does not ease those limits, he warned, U.S. companies would be handicapped against Internet competitors elsewhere, which in turn could cut U.S. banks and credit card issuers out of the action.
"We have been impeded by the government from dispensing (software) that allows people to encrypt financial transactions," Mr. Clark told a conference sponsored by Sen. Robert Bennett, R-Utah. "If we don't change the law soon, foreign firms are going to take the business."
Adequate protection of credit card numbers and customer privacy are critical to development of electronic commerce, Mr. Clark said. Netscape is among many vendors of Internet technology fighting U.S. policies that they say will give foreigners a leg up.
"The business of using the Internet for commercial transactions is on the verge of exploding," Mr. Clark said.
Netscape was one of several technology companies that worked with MasterCard and Visa to develop the Secure Electronic Transactions protocol for on-line credit card transactions. The protocol is being tested in several countries, but deployment could be slowed by inconsistent standards or legal limits on the strength of the keys used to encode and decode messages.
Sen. Bennett pledged to revive legislation he sponsored two years ago to liberalize U.S. policy on encryption exports. He withdrew that legislation, co-sponsored by Sen. Patty Murray, D-Wash., after complaints from the National Security Agency.
Sen. Bennett, chairman of Senate Banking's financial services and technology subcommittee, called the restrictions "ridiculous" and promised not to back down again.
Mr. Clark said it is possible to put strong encryption technology on the market while thwarting criminals, relying on court orders when necessary to gain access to decryption keys. Much of the high-tech community has rallied around liberalization proposals by Sen. Conrad Burns, R-Mont., and Sen. Patrick Leahy, D-Vt., that do not even make provisions for such "back door" government code-breaking.
