Ralf Bendrath chided me yesterday for bragging about having proven Bruce Schneier wrong in his concern that there is not a “viable business model” for the Credentica technology. (In my defense, Bruce had said, “I'd like to be proven wrong.”, and I was just trying to oblige him.)
Sometimes, Microsoft really spends its money well, such as last week's acquisition of U-Prove technology from Credentica.
This is a damn, exciting acquisition. It's strategic and timely.
U-Prove is, simply put, a privacy/security protection mechanism. The technology works on a simple principle: Enable transactions by revealing as little information as possible.
Credentica's Stefan Brands, Christian Paquin and Greg Thompson have joined Microsoft, where they will work as part of the Identity and Access Group. Microsoft also acquired associated U-Prove patents.
Brands is a well-regarded cryptographer and author of “Rethinking Public Key Infrastructures and Digital Certificates; Building in Privacy,” which explains the principles behind U-Prove. The book is available for free download, courtesy of MIT Press. He brings a somewhat radical approach to cryptography: Disclose or collect little—ideally no—private information during any transaction process. During most transactions, whether online or offline, too much personal information is exposed.
I vaguely recall Brands from Zero-Knowledge Systems, where he went in early 2000. About six months earlier I consulted Zero-Knowledge Systems’ chief scientist for a story about an alleged cryptographic flaw/back door in then unreleased Windows 2000.
Brands, his colleagues and U-Prove will first go into Windows Cardspace and Windows Communications Foundation. Microsoft's Brendon Lynch explained in a Thursday blog post:
“Credentica's U-Prove technology will help people protect their identities by enabling them to disclose only the minimum amount of information needed for a transaction—sometimes no personal information may be needed at all. When this technology is broadly available in Microsoft products (such as Windows Communication Foundation and Windows Cardspace), enterprises, governments and consumers all stand to benefit from the enhanced security and privacy that it will enable. We look forward to a world where people have more control of their personal information and are better protected from harms of online fraud and identity theft.”
Kim Cameron, Microsoft's identity architect, does a wonderful job explaining Brands’ “minimal disclosure” approach in a Thursday blog post and how the company may apply it. The basic concept: to use other cryptographic means to verify identity “without revealing the signature applied by the identity provider.”
Microsoft has made one helluva good acquisition, whose potential long-term benefits I simply cannot overstate. The company has been trying to tackle the identity problem for nearly a decade. Early days, Passport acted as a single sign-on for multiple services, a heritage Windows Live ID expanded. But U-Prove departs from Microsoft's past identity efforts. The idea is to identify you without, well, identifying you.
Microsoft online services would look dramatically different with an identity mechanism that truly protected privacy and security on both sides of the transaction all while guaranteeing both parties that they are who they say they are, without necessarily saying who they are.
The best conceptual analogy I can think of is Swiss or offshore banking, where an account holder presents a numerical token or tokens that verify his or her right to account access but not the individual's identity or necessarily the token's issuer. Such a mechanism could be a boon to business and consumer confidence in online transactions as well as reduce petty fraud.
Microsoft's money would be better spent on more acquisitions like this one, rather than frittering away valuable resources on Yahoo. Microsoft is operating on the false premise that Google's huge search lead also puts it ahead in advertising—too far to catch up without a means of leaping ahead. Yahoo is the means.
But Microsoft is mistaken. Online activities and transactions are more complex than that. Search is one strategic technology, but there are others that Google doesn't control. If Microsoft could take a strategic lead protecting identity around transactions, the company could better enable all kinds of Web activities, and in so doing raise its online credibility. Privacy concerns have dogged Google.
I think Microsoft should take half of its proposed Yahoo offer and spend it on more acquisitions like Credentica's U-Prove technology. I'm not the first to suggest that Microsoft spend $20 billion on smaller companies. But I will say that U-Prove is an example what Microsoft should do to bolster its online technology portfolio in more meaningful ways, without taking on the hardship of a large, messy acquisition like Yahoo.