Firms Get OK to Export Encryption Software

Winning an important exception to U.S. export curbs, Netscape Communications Inc. and Microsoft Corp. said they received federal approval to sell their most sophisticated data-scrambling technology to overseas banks. The companies’ encryption software is the most advanced the U.S. government has approved for export on a wide scale, a possible sign of increased flexibility on the government’s part. Current export restrictions forbid U.S. companies from selling such technology overseas because of concerns it could fall into the wrong hands and enable wrongdoers to mask illicit electronic activities such as money laundering. Redmond, Wash.-based Microsoft and Mountain View-based Netscape said they were able to win the exception after many months of negotiations with the Commerce Department. Current law is more lenient on the sale of software to overseas banks, since regulations generally require banks to keep detailed records of transactions. A Commerce Department spokeswoman could not be reached for comment. The companies are exporting the encryption technology in versions of their browser software for cruising the Internet and in “server” software used by banks to manage online transactions. On Nasdaq, Netscape shares rose $1.69 to close at $35.75; Microsoft rose $4 to close at $132.06.