Cashing In

Central Bank of the Web

The problem is that Microsoft will be the only company with unrestricted control of both the servers and the programming mechanism by which others access HailStorm info.

"The idea that Microsoft can be trusted as the repository of your personal information is about as far from the average consumer's image of Microsoft as you can get," says Enderle. Giga Information Group surveys suggest users wouldn't feel comfortable even if a third-party fiduciary were involved.

Microsoft is going to great lengths to assure everyone that it will honor user privacy and not sell subscriber information to third parties. But there's currently no law to make it keep that promise, points out GartnerGroup research fellow Richard Hunter. He notes that, until subscriber protests forced a change, the terms of use for the Passport service granted Microsoft ownership of all content stored there.

"That behavior by a major corporation-especially one that wants to be everyone's home court-is not the kind of thing that builds trust," Hunter says.

Microsoft hasn't been shy about changing terms of use for its other products once it achieves market dominance. It recently eliminated support for not-so-old versions of its software, increased support charges for newer ones and changed corporate licensing policies "without warning and in ways that are clearly not in the best interests of users," says Hunter. "Would they do the same with HailStorm?"

That's pretty much up to Microsoft. It reserves the right to revoke its HailStorm developer licenses, so as "to ensure that no service using HailStorm abuses the resources involved." That seems prudent, but also lets Microsoft dictate how HailStorm information is distributed and how much it costs.

Even if you're comfortable with Microsoft as your banker, the aggregation of so much critical information creates an almost impossible security challenge, says Hunter. Microsoft is already every hacker's favorite target, and it has a spotty record at repelling attacks-even when its own source code is at risk.

GartnerGroup sees losses to cybercrime increasing 1,000 to 10,000 percent through 2004, as hackers figure out it's easier to steal a few bucks from millions of people at one time than to rob a bank.

Ultimately, HailStorm is one of those long-build-out visions Microsoft is so good at selling: Establish a standard before anyone else does, then spend a few years working out the bugs.

The new millennium hasn't been kind to Microsoft so far. But apparently, there's still a healthy supply of its most valuable commodity: Microsoft moxie.

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This article was originally published in the September 2001 print edition of Entrepreneur with the headline: Cashing In.

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