10 June 1998
Thanks to DN


High-tech industry, FBI meet over encryption deadlock
Senator calls session 'a good first step'

June 9, 1998
Web posted at: 11:45 p.m. EDT (0345 GMT) 

WASHINGTON (CNN) -- FBI Director Louis Freeh and Attorney General Janet Reno
met Tuesday with high-tech industry executives, including Microsoft's Bill
Gates, to talk about regulation of computer data-scrambling products. 

The two-hour session came amid negotiations between the computer industry
and the Clinton administration over encryption policy, and as Congress
considers several bills aimed at relaxing strict U.S. export rules on the

After the meeting, held in the office of Sen. Dianne Feinstein,
D-California, industry and law enforcement participants filed out without
speaking to reporters. 

Although Feinstein declined to comment on the substance of Tuesday's
discussions, she said "the seeds for possible approaches" to resolve the
deadlock had been discussed. 

"We had a very good sharing of concerns, government and industry," she said.
"I think everybody in the room wants to work cooperatively and we will be
talking again in that regard." 

'A very good first step'

"I think this was a very good first step," added Sen. John Kyl, R-Arizona, a
meeting participant who chairs a Senate panel studying the issue. 

After Tuesday's meeting, a White House official said that it would energize
the administration's efforts to find a compromise. 

"We recognize that such a solution must include further real relaxation of
export controls," the official said. "The presence of industry leaders
encourages us to redouble our efforts with industry with the goal of
producing agreement by this fall." 

In addition to Gates, industry leaders attending the meeting included Jim
Barksdale, Netscape Communications Corp.'s chief executive officer; Timothy
Price, MCI Communications Corp. president; Steve Case, president of America
Online Inc.; Scott McNealy, CEO of Sun Microsystems Inc.; and Eric Schmidt,
Novell Inc.'s chairman. 

The FBI and the industry have been at odds for several years over proper
regulation of encryption programs, which scramble information and render it
unreadable without a password or software "key." 

The debate

Industry officials argue that encryption has become an increasingly critical
component of global commerce and communication over the Internet. They say
strict U.S. export limits on encryption products allow companies outside the
United States to grab more business. 

The FBI, fearing the products will be used by criminals and terrorists to
thwart surveillance efforts, favors strict controls on encryption sales abroad. 

The agency has asked Congress to require all domestic products to include a
feature allowing law enforcers to crack any coded message, insisting it
needs the same ability to obtain a search warrant to monitor computer
transmissions that it has to tap telephone lines. 

The high-tech industry has allied with privacy advocates to fight any such
system. Privacy experts fear police agencies could abuse traditional rights
to private conversations if given keys to decode computer messages. 

Corporate security experts have warned of extraordinary complexities and
huge costs associated with a "key management" system that would allow access
to encrypted material. 

Failure to find a solution

U.S. lawmakers have repeatedly failed to find a solution to the deadlock. 

Last year, Kyl called for a "balanced policy" while Feinstein has supported
FBI efforts to impose domestic controls on encryption. 

The Clinton administration has searched for a compromise, easing some export
rules while promoting technical solutions to meet the needs of the FBI and
other law enforcement agencies. But in April, Commerce Secretary William
Daley conceded the administration had failed to implement its compromise plans. 

Tuesday's meeting will be followed on Wednesday by a meeting organized by
lawmakers who oppose domestic encryption controls. That meeting will include
a broader array of executives and advocacy groups. 

Reuters contributed to this report.