Date: Thu, 13 Apr 2000 12:41:04 -0700
From: apfanning@psn.net ("Alan Fanning")
Subject: [lpaz-repost] Zero Knowledge
To: lpaz-repost@onelist.com ("lpaz-repost")
April 05, 2000, 11:24 AM PST
Can Zero-Knowledge Hush Up the Net?
At a conference on computer privacy, "pseudonymity" is the rallying cry
of a 26-year-old Canadian's latest Netco.
By Elinor Abreu
TORONTO In an age when most Web sites leave hidden cookies on your
computer and when marketing-driven "free" PC offers are adime a dozen,
a 26-year-old Canadian is helping people use the Net the old fashioned
way anonymously
"There is no Faustian bargain required," Austin Hill, president of
Zero-Knowledge Systems, said in his keynote speech today at the
"Computers, Freedom and Privacy" conference. Hill dismissed offers of
so-called free equipment or Internet access in exchange for revealing
personal information or looking at ads: "People don't need to sell their
lives or their data cheap."
In a tie-less black suit and sporting a Vandyke goatee, Hill stood out
from most other conference speakers and attendees, who clung to their
casual dress and long hair. He founded Zero-Knowledge with his father
and brother after selling off his first company, ISP TotalNet, which he
founded at age 21 and is now Canada's third-largest ISP.
Hill's interest in privacy began at age 17 while working as a consultant
showing companies how easy it was to hack into their networks. The
advent of online direct marketing and other security exploits clered
the path for Zero-Knowledge to bust onto the scene and for politicians
to jump on the bandwagon. "I wouldn't be surprised if privacy becomes a
presidential issue this year," Hill says.
Privacy has long been a concern for consumers, but the ease with which
data can be exchanged and compromised online has pushed it closer to the
forefront. Although U.S. business has tended to put a higher importance
on enabling commerce and advertising than privacy guarantees, the
government has been struggling to hold onto anachronistic
encryption-export policies in the name of national security and
quibbling with the European Commission over strong data-privacy
protections for citizens.
People are growing more concerned as they find out how readily some Web
sites give up subscribers' identities when slapped with a subpoena, and
as they realize how much information ad firms collect about them when
they surf the Web. Public outcry led online ad agency DoubleClick to
back off plans to merge its online and offline user profiles, but
privacy advocates worry that DoubleClick might be just the tip of the
iceberg.
Soon, mobile phones and OnStar computer systems in Ford and GM cars
might pitch pizzas to people based on their location or dining plans.
Likewise, the planned network intelligence in household appliances such
as refrigerators that will "anticipate" people's needs.
"We're building tracking at every single point," so global positioning
system locators can be used for direct advertising, Hill says. "I don't
want to live in a world where my every move is tracked because I happen
to own a cell phone."
The slow but steady moves toward creating digital-certificate
authorities and networks that verify people for e-commerce, voting and
other activities also are problematic, according to Hill. "We've
developed an online national ID card" that can be hacked or otherwise
compromised, he adds.
"Going forward, [privacy] will be one of the most important issues this
century," Hill says, likening it to the civil rights and environmental
movements of the 1960s. "The next five years will be the deciding
factor."
If privacy is not built into the networking protocols and computer
systems, "I believe privacy will be one of those things heard talked
about like 'Remember the good old days?' " he says. "Like memories or
old movies."
In addition to embedding privacy into technology, Hill says the industry
needs self-regulation and governmental oversight through legislation.
"No one of those alone will solve the problem."
In reality, Hill advocates using pseudonyms, not total anonymity.
Zero-Knowledge's Freedom tool allows people to surf the Web, send and
receive e-mail and participate in chat rooms without revealing personal
information. Because people might want different identities and personal
data revealed depending on what Web site they're visiting or what
activity they are doing, they can create different pseudonyms.
"You can't build relationships using anonymity," Hill says. Users of
Freedom can disclose information about themselves a they build trust
with the Web sites they visit. So someone might have one pseudonym
disclosing financial information at online bank Wingspan and another
pseudonym disclosing only their entertainment and news preferences at
Yahoo. "With pseudonymity, you know as much about me as I'm willing to
tell you."
Zero-Knowledge routes its traffic over encrypted servers, so Web sites
they visit don't even see customers' IP addresses. Customers pay $10 per
pseudonym per year and nothing for the software.
Hill won't say how many subscribers his company has, but he did disclose
that there were 85,000 for the beta test, which ended when the
commercial product was launched December 1. Zero-Knowledge partners with
about 180 ISPs, including PSINet. The system is built so that it would
be impossible for Zero-Knowledge or its partners to reconstruct a
subscriber's identity. This contrasts with emerging infomediaries, which
are responsible for disclosing subscriber information selectively but
also can disclose the identity if necessary, says Hill.
Meanwhile, Zero-Knowledge is taking off. His firm's 80 employees in
December have grown to about 200 now, and he expects to have 600 by the
end of the year. The company has raised $38 million, led by Platinum
Venture Partners and Strategic Acquisitions Ventures, and is planning
another round in the next two months. The company, which isn't
profitable yet, has an IPO in its future.
In December, Zero-Knowledge acquired patents that enable anonymous
electronic cash transactions and other anonymous credentials that would
allow people to prove to an adult Web site that they're over 18 or a
U.S. citizen, or show an auction site that they have credit without
revealing other information, for example. Commercial products using that
technology are expected early next year. "We're giving people the
ability to stop the collection of [their] data," says Hill. "From there,
we'll give them the ability to manage their IDs."
In addition, Zero-Knowledge is talking to backbone providers, networking
equipment and computer manufacturers, portals and others about bundling
privacy technology into their products and services, he says, declining
to name names. "Our goal is to have privacy kits ubiquitous the same way
browsers are now."
And what of the burgeoning field of direct marketing? It will evolve
into permission-based marketing, which gets response rates of 18 to 28
percent, as opposed to the usual online ad, which has a response rate of
1 percent or less. Hill says: "Profile-based marketing is dead."
Basically, Hill is hoping to bring the Web back to the days when the
saying "On the Internet, nobody knows you're a dog" was true.
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