Re: Netscape gives in to key escrow

[tcmay@got.net (Timothy C. May)]

With the assumption that this is not a troll, and giving the writer some
slack on account of the non-native-English-language origin, I'll respond to
a few of his or her points:

At 10:45 AM 12/1/95, JR@ns.cnb.uam.es wrote:
>With regard to all this waving about Netscape giving in to key scrow...

Key _escrow_, though "scrow" is perhaps just as accurate as the
improperly-named "key escrow" (hint: escrow is something done voluntarily,
not the situation here with GAK).

>First one question, and then some considerations. The question:
>
>- How much of Netscape stock is in the hands of Netscape? I mean in the hands
>of the people that work in/for the Company? And how much is in outsiders whose
>only interest is earning as much as possible?

A small fraction of the shares are now for sale. The exact numbers can be
gotten from the Netscape offering prospectus (ironically, I tried to hunt
for it in Infoseek, but Netscape claimed it was busy the 10 or so times I
tried to run Infoseek on "Netscape"...no conspiracy, just crowding, even at
1:45 a.m. PST).

In particular, the billion dollars' worth of Netscape stock (and/or
options) that Jim Clark holds is mostly not on the open market (and won't
be for years).

Having said this, I think all of the shareholders, either of issued shares
or as-yet-unissued shares, are interested in maximizing share value. Not
surprising.

Importantly--and maybe this is the real point JR is making--we on the
Cypherpunks list are probably *not* interested in Netscape's stock price.
But who cares? Our role is not to maximize Netscape stock price, but to
talk about what is "right" and what is not right. And GAK is definitely not
right, to the vast majority of us.

>That is, my friends, the key point. When Netscape began selling shares, and
>before and after that, they were (and still are) widely criticized in this
>list.

They were "criticized" not because they went public with their stock but
because of their security mistakes, made more important by their sudden
prominence. The Net/Web is being built up of beams, struts, and bricks, and
it's important to point out flaws that make the beams buckle and structures
collapse.

...
>So, now we have that most of Netscape is owned by people that either don't
>care but for money, or fundamental activists. And then, those people have to
>take decisions.

??? I don't get the point you're making. Sure, most of Netscape stock that
is publically traded is owned by investors. On the other hand, most of the
stock that is not yet issued or is tied up in unexercised stock options is
in a sense owned by people who care how well the stock does.

>And then they are faced with confronting their government who tells them what
>to do if they don't want to have problems. And who probably offers some hidden
>compensations to get their support (maybe tax reliefs?). And who menaces with
>countermeasures if they don't agree.

Well, this is the point, isn't it? I doubt there are such things as "tax
reliefs" for Netscape--these things are done pretty much out in the open in
the U.S., and any special tax treatment would be widely noticed--but there
may indeed have been "discussions" with senior management at Netscape.
Several of us have already speculated in broad terms on this.

Look, I don't impute personal malice to Jim Clark. I do, however, believe
in "institutional evil," in the sense that a GAK regiment which says, for
example, that anyone who keeps a diary must "escrow" copies of it with the
local police is an "evil" idea, counter to the Western notions of liberty
and justice.

Thus, for whatever reason Jim Clark came out in support of GAK, we must
criticize it. And take positive steps to counter it (which I think we are
doing).

>What did you expect Netscape to do? The guys with the money and the control
>won't face all the small shareholders and tell them they are going to be
>"evil" against the gov. and the priests and the religious organizations,
>and that they will face gov. restrictions, give up political and economic
>advantages, etc.. to satisfy a bunch of cypher
>punks that are continuously
>complaining publicly against the company and don't even buy shares.

First, a viable strategy is to simply do nothing. Ignore the goverment's
protestations, drag one's feet, shrug, etc. Jim Clark could simply have
said nothing. (Recall that Bill Gates came out recently saying that strong
encryption is inevitable...Clark could have either said nothing, or said
something similar to what Gates said.)

Second, the issue is not "satisfying" a "bunch of cypherpunks." If Netscape
truly pushes for GAK, and people reject GAK and Netscape, then this will
surely hurt shareholder value. (Frankly, I expect one or more stories to
appear in the next few days about the budding "Friends Don't Let Friends
Use Netscape" and "Just Say No to Netscape" movements. Whether this will
hurt the stock is unclear.)

>Sitting back and complaining won't help crypto, freedom or anything for that
>matter at all.
>
>That said, before blaming more on Netscape and asking a starting company
>whose major aset is still shareholders instead of sales, we should think
>better about the correct strategy.
>
>Now, who's gonna offer some constructive ideas for a change?

I say that the ideas being discussed are in fact "constructive" ideas.  I
won't reiterate them all here, but they clearly involve concrete action
(e.g., modifying server software to issue warnings to Netscape users, or
encouragement of alternatives to Netscape).

What more are you expecting? Have you been reading what people are actually
discussing doing and actually already doing?

--Tim May

Views here are not the views of my Internet Service Provider or Government.
---------:---------:---------:---------:---------:---------:---------:----
Timothy C. May              | Crypto Anarchy: encryption, digital money,
tcmay@got.net  408-728-0152 | anonymous networks, digital pseudonyms, zero
Corralitos, CA              | knowledge, reputations, information markets,
Higher Power: 2^756839      | black markets, collapse of governments.
"National borders are just speed bumps on the information superhighway."