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Weekly Column

A Hollywood Ending: Does Microsoft Really Care About Protecting the Entertainment Industry?

Status: [CLOSED]
By Robert X. Cringely

The Palladium was a famous theater in London and another in Hollywood, and the name choice makes more and more sense to me as the story develops about Microsoft's computer security initiative of the same name. It certainly felt like theater, for example, when I received this week a very careful message on the subject from inside Microsoft. It's rare that I hear from any of the troops in Redmond, and the writer's message is an interesting one that made me think a lot — not just about Palladium, but about the whole power structure behind the protection of intellectual property rights and just where Microsoft fits in. Frankly, I think we're being played for fools. The message follows (with my addition of capital letters where needed).

As a long time reader and watcher, I've always respected your insight. But you should know that you're pretty far off the mark with your recent Palladium commentary. It's basically content creator (be that ISV or copyright holder) driven only, and Microsoft only provides the infrastructure to let that happen. Obviously, I cannot comment on internal issues, but this public interview sums it up pretty accurately [cites a URL that you'll find is the first Links of the Week entry this week]. Especially the following (an interview with Palladium product manager Mario Juarez published in Digital ID World):

"DIDW: So flexibility is a big goal, with nothing traceable locked in and no specific required PKI structure it must be part of?"

"Juarez: The architecture is designed to be an open platform and open environment. As an ISV or service provider you can build anything you want on top of this platform and offer up a value proposition with consumers, or with other businesses. It can do all kinds of interesting things. But there's nothing in the system that says, for example, that if you run something in one of these vaults that you've got to have the code signed, or you have to have things authenticated. It's a very basic, open environment and we're not trying to build any elements of it that are going to require verification or the participation of anything other than the ISV and the person who is using the services want to have happen."

This is an interesting interview and well worth reading in its entirety, containing many details of Palladium and giving a sense of the project's beginnings as a way for Microsoft programmers to keep their stuff their stuff, simple as that. But then it never stays simple, does it? Java started as a way to keep James Gosling from quitting his job at Sun, BASIC began as a way to teach programming to undergraduates at Dartmouth. Unix began as a minor project — a pun really — at AT&T Bell Labs. Just because projects start with modest intentions doesn't mean that they can't grow into major power grabs. Certainly that's the case with Palladium.

Here is my reply:

Thanks for writing. You may well be correct that I am going too far in characterizing Microsoft's intentions with Palladium, but intentions are one thing and the eventual use to which the code may be put are entirely different. I have watched these things morph over the years and they always morph in one direction.

Say I am the IT director for the Gambino crime family in New York or maybe I run Osama Bin Laden's help desk. Will Palladium help me secure my communications and protect the interests of my organization, whatever those interests might be? Mr. Juarez pretty much comes out and says that Palladium has back doors, saying they may be forced on Microsoft by foreign governments. I've been writing software for 30 years and have yet to see a back door that was ever forced on anyone. Rather, what's forced is access to the back doors that already exist. Bulgaria simply wants its own key. This fact alone takes Palladium out of the realm of copyright protection, which is the protection of expression, not information. This isn't about content creation at all, it is about control of the computer that I bought and, by virtue of my having bought it, that I should control. I don't like that.

But the switches are all turned off, we're told. Nothing needs to be digitally signed if we don't want it signed. And yet, if you look into the heart of Palladium, you'll see that by default EVERYTHING has to be signed or the system doesn't function. True, some are signed with the "I'm a damned fool" certificate, but the point is that going from switches all off to all on can be done in a moment, and that moment is out of my control if my machine is at all connected to the outside world. I don't like that.

Step back for a moment and look at this thing, which we're told is going to torque us all around simply to protect the property rights of movie studios and record companies. Now compare the annual revenue of all U.S. movie studios with the revenue of the PC industry. In 2001, the PC business was more than 12 times the size of the movie business, and more than eight times the size of the movie and television businesses combined. Microsoft has more cash on hand than the total combined profits of all movie studios and broadcast and cable networks for the last decade. So why should Microsoft care about movie studios? Frankly, they don't. It's just a reason to give to people like me, and one to be believed by people like you.

If this was just about selling more computers, Microsoft could manage that by simply expanding Windows and Office a bit more, slogging down those one gig Pentiums and shaming us all into new machines. This is bigger than that.

Forget the flow of music and movies through your computer, and wake up to the flow that really counts, the flow of money. Put Palladium on every computer, and whoever controls Palladium controls the flow of money in the world. Wasn't that the real point of .NET? Would Microsoft really pursue .NET without a corollary hardware strategy? I don't think so.

But hey, this is just Microsoft you say. Microsoft doesn't envision anything so diabolical. And I agree with that statement simply because I don't see Microsoft as a company having much vision at all. That's why it is possible for Palladium to be devised exactly as Mr. Juarez says, from the bottom up for purely altruistic reasons. In fact, I am sure that is how it happened. But then one day somebody near the top of Microsoft realized that what they had was a way of taxing the world, and suddenly, Palladium became strategic for Microsoft.

Now maybe I am a crackpot. And if I am, then you'll be able to take apart everything I have just written, point by point, showing how crazy it is. Please do. I'm waiting.

And I'm still waiting.

As a footnote here, I did a Google search on my writer from Microsoft, and found that he had submitted comments to the Department of Justice asking that Microsoft be dealt with leniently in the penalty phase of the current anti-trust trial. While the writer described himself to the DOJ as an "entrepreneur," he did not identify himself as a Microsoft employee. How entrepreneurial of him! I wonder how many of the positive comments received by the DOJ came from such closeted Microsoft people?

Now back to Palladium. One aspect of this story that really amazes me is the role of the recording, broadcasting, and film industries, which are accorded far more prestige than I think they deserve or that they would receive from Microsoft on a normal day. This is a company, remember, that is consistently acused of stealing intellectual property and has been found guilty of doing so. There is no respect for intellectual property rights that I can see there. Beyond Bill Gates's extensive video collection of Audrey Hepburn movies, I don't think the movie business makes much difference to Microsoft. It's all about the money.

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