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HP, IBM in encryption deal
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February 27, 1998: 10:32 a.m. ET
White House gives approval to export the strongest type of encryption
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NEW YORK (CNNfn) - Hewlett-Packard Co. and IBM Corp. are teaming up to boost Internet commerce after HP received permission to offer a stronger encryption software overseas than was previously allowed by the U.S. government.
The Clinton administration gave its approval to allow the two companies to export 128-bit and triple-DES encryption, the strongest configuration available to scramble data for secure transmission.
Hewlett-Packard (HWP) was granted the license for its encryption management technology, known as VerSecure. However, HP plans to use a variety of IBM's (IBM) SecureWay hardware and key-recovery software as an integral part of its VerSecure offerings.
Key recovery is a mechanism that allows users to manage the secret codes used to unscramble encrypted messages and recover those keys if they are lost.
The companies hope that the stronger encryption technology will boost electronic commerce. Consumers still retain a high amount of suspicion about sending payment information, such as credit card numbers, over the Internet out of worry that outside parties will be able to obtain the information.
"We think working together to leverage the strengths of both companies in this important area will lead to greater use of security software and hardware worldwide," said HP Chairman Lewis E. Platt.
The VerSecure software allows for the scrambling power to be adjusted. Overseas companies will be able to choose encryption strengths according to their needs and local regulations.
Until now, the government has blocked the export of 128-bit encryption software out of concern that terrorists could use it to communicate plans for committing acts of terrorism.
The Clinton administration will decide in which countries the strongest type of HP's encryption can be activated. Thus far, only the United Kingdom, Germany, France, Denmark and Australia have been allowed to use the full force of the software.
The granting of the export license was good news not only for HP and IBM but also for other U.S. encryption software makers. Those software firms have pushed hard for greater freedom to export their products out of fear that non-U.S. competitors who are unimpeded by export constraints would be able to stake an early claim on the encryption market and have an overall advantage in the future. 
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Hewlett-Packard
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