[Antitrust] Verisign buys Thawte creating an encyption monopoly
Despite the DOJ's request to delay their merger Verisign (Mt. View, CA,
US) and Thawte (Durbanville, South Africa) recently announced its
completion, in a record 2 months:
http://www.thawte.com/press/davidvsgoliath.html
Along with the ultra-rapid merger Verisign has announced their
intention to continue selling Thawte X.509 certificates for $100/year
over the coming year. What this press release does not say is that the
prices will be going up rather than down after the year is over.
X.509 certificates are the digital signatures required by web browsers,
email clients, and other applications which use encryption. The X.509
standard for public-key encryption is the basis for virtually 100% of
today's Internet e-commerce.
Verisign, which formerly had a 60% market share and Thawte, with 35%,
now constitute an overwhelming monopoly in the digital certificate
marketplace.
Why the price of these digital certificates is so high, and why prices
are going up rather than down should be matters of great concern to
anyone interested in consumer rights or familiar with monopoly business
practices. The Verisign - Thawte merger will raise the barriers to
entry for new certificate authorities (CAs) prohibitively high. These
barriers are not due to the technological requirements of setting up a
CA, as you might expect, but rather to becoming recognized by browser
manufacturers. Microsoft and Netscape effectively control who can
become a CA by the way their web browsers manage X.509 certificates.
The encryption certificate marketplace has been effectively stifled due
to the small number of browsers and CAs. With the loss of Thawte this
marketplace becomes smaller still. The unusual absence of competition
in these sectors will have profound reverberations for Internet
commerce and economic efficiency for generations to come.
Those of us who work with encryption technology have only one question:
Will the DOJ act to keep this market open?
--
Roger Marquis
Roble Systems Consulting
http://www.roble.com/
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