It reminds me of an even better way for a word processor company to make money: just scramble all your documents, then demand ONE MILLION DOLLARS for the keys to decrypt them. The money must be sent to a numbered Swiss account, and the software checks with a server to find out when the money has arrived. Some of the proposals for what companies will do with Palladium seem about as plausible as this one.
Isn't this how Windows XP and Office XP work? They let you set up the system and fill it with your data for a while -- then lock up and won't let you access your locally stored data, until you put the computer on the Internet and "register" it with Microsoft. They charge less than a million dollars to unhand your data, but otherwise it looks to me like a very similar scheme. There's a first-person report about how Office XP made the computers donated for the 9/11 missing persons database useless after several days of data entry -- so the data was abandoned, and re-entered into a previous (non-DRM) Microsoft word processor. The report came through this very mailing list. See: http://www.mail-archive.com/cryptography@wasabisystems.com/msg02134.html This scenario of word processor vendors denying people access to their own documents until they do something to benefit the vendor is not just "plausible" -- it's happening here and now. John