PGP creator plans to encrypt hard disks, video, fax Zimmerman's PGP Inc. acquires marketer of PGP software By Elinor Mills, IDG News Service, San Francisco

July  1996

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Palo Alto, CA -- Phil Zimmerman, who faced criminal charges over the distribution of his PGP (Pretty Good Privacy) encryption software on the Internet, is commercializing his freeware and developing products that will encrypt hard disks, as well as voice, video, and fax transmissions, his company announced in early July.

Zimmerman's PGP Inc., incorporated in March, announced that it has acquired ViaCrypt, which markets commercial versions of PGP software to banks, state governments, manufacturing firms, and Fortune 500 customers.

Meanwhile, the free distribution of PGP software is saving lives, Zimmerman said during a panel discussion at the Security and Freedom through Encryption (SAFE) Forum at Stanford University.

"Overseas, human rights groups are using PGP to encrypt the files of people testifying about human rights abuses, and the military, in Burma for instance, can't get to the files because of PGP," he said. "Amnesty International uses PGP in its field offices in third-world countries."

PGP Inc. will continue to offer its PGP "freeware" but will concentrate on making money on commercial versions.

Zimmerman holds the copyright for his encryption software, but buying ViaCrypt gives PGP Inc. a license for RSA public key cryptography that will be incorporated into PGP products, said Thomas Steding, CEO of PGP Inc. In addition, PGP Inc. can now sublicense its original e-mail encryption application, to which ViaCrypt has held exclusive rights since it licensed the PGP software in 1993, according to Steding.

PGP Inc. will release a commercial version of PGPfone before the end of the year, followed next year by products to encrypt other forms of Internet transmissions, such as video and fax, and PGPDisc for hard drives.

"We have the dominant application now for e-mail, but we think telephony will take off rapidly," said Steding.

PGPDisc will address the security concerns of users whose laptops get stolen, he added. Technical support, upgrades, enhanced user interfaces and earlier availability will differentiate the commercial versions from the free versions, according to Steding.

Zimmerman's PGP program was posted to a Usenet news group on the World Wide Web in 1991 and has been freely distributed over the Internet since then, making it a standard for e-mail encryption. PGP has about 98 percent of the e-mail encryption market, Steding said.

The U.S. Justice Department began a three-year investigation of Zimmerman after the posting, claiming he violated federal export law, which classifies strong encryption as a munition and prohibits the export of encryption software with algorithms longer than 40 bits. The Justice Department claimed that the Internet dispersion of PGP, which has a key length of 128 bits, was equal to exporting it because it was reaching the hands of non-U.S. users.

Without explanation, the Justice Department dropped its probe in January 1996, around the time it proposed loosening encryption export restrictions to allow export of 64-bit software and reverting to a key escrow system under which the U.S. government would have the capability to unlock part of the coded message.

The Clinton administration's key escrow proposal is opposed by most software vendors, who say they are losing money to non-U.S. firms that are able to sell products with strong encryption, as well as by foreign firms that don't want the U.S. government to have any access to their encrypted messages.
--Elinor Mills, IDG News Service, San Francisco Bureau

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