IP: wsj on Sun's plan to skirt encryption policy

[David Farber <farber () cis upenn edu>]

                     The Wall Street Journal -- May 19, 1997
 Sun's Selling 
 Of Encryption 
 To Skirt Policy 


 ----


 By David Bank
 Staff Reporter of The Wall Street Journal


 MOUNTAIN VIEW, Calif. -- Sun Microsystems Inc. plans to sell advanced
data-security
 software from a Russian supplier to overseas customers, a move that skirts
U.S. export regulations
 and is likely to receive close U.S. government scrutiny.


 Sun is expected to announce today that it will sell encryption software
licensed from Elvis+ Co., a
 company formed by scientists from the former Soviet space program. Sun has
a 10% equity stake
 in the Russian firm. The Elvis+ products will be shipped to overseas
customers from Sun
 distributors in third countries to keep them from falling under U.S.
jurisdiction.


 Sun's move illustrates how global market pressures are making it
increasingly difficult for U.S.
 officials to control the spread of advanced encryption hardware and
software. The technology,
 which scrambles data to protect it from computer eavesdroppers, is
considered vital to the growth
 of electronic commerce. But export of powerful encryption products is
barred under U.S.
 export-control laws, on grounds that terrorists and others will use it to
evade surveillance.


 The Sun action will cause the Clinton administration to face a difficult
decision, said Jim Bidzos,
 president and chief executive of RSA Data Security Inc., a unit of
Cambridge, Mass.-based
 Security Dynamics Technologies Inc., a major supplier of encryption
technology. "The government
 has to shut this down, or else the competitors of Sun probably have to
say, `We're going to do the
 same thing,'" he said. Mr. Bidzos, a long-time critic of the export
controls, praised Sun's move as
 "blatant and in-your-face.".....