What if you could rig it so that competing with your flagship product was against the law? Under 1998's Digital Millennium Copyright Act, breaking an anti-copying system is illegal, even if you're breaking it for a legal reason. For example, it's against the law to compete head-on with the iPod by making a device that plays Apple's proprietary music, or by making an iPod add-on that plays your own proprietary music. Nice deal for Apple.
Microsoft gets the same deal, courtesy of something called "Information Rights Management," a use-restriction system for Office files, such as Word documents, PowerPoint presentations, and Excel spreadsheets.
We've had access control for documents for years, through traditional cryptography. Using PGP or a similar product, you can encrypt your files so that only people who have the keys can read them.
But Information Rights Management (IRM), first introduced in Office 2003, goes further -- it doesn't just control who can open the document, it also controls what they can do with it afterwards. Crypto is like an ATM that only lets you get money after you authenticate yourself with your card and PIN. IRM is like some kind of nefarious goon hired by the bank to follow you around after you get your money out, controlling how you spend it.
With IRM, an Office user can specify whether her documents can be printed, saved, edited, forwarded -- she can even revoke access to the documents after sending them out, blocking leaks after they occur. Documents travel with XML expressions explaining how they can and can't be used.
Now, if anyone was allowed to make a document reader, it would be simple to make a reader that ignores the rules. This is a perennial problem for Adobe's password-restricted PDFs -- the only thing that distinguishes them from normal PDFs is a bit that says, "I am a restricted PDF." Just make a PDF reader that ignores the bit and you've defeated the "security." It's about as secure as one of those bogus "Confidentiality notices" that your mail-server pastes in at the bottom of every email you send.
There are plenty of readers for Microsoft's Office formats these days. Apple makes at least two -- Pages and TextEditor. Google and RIM both have Office readers they use to convert Office documents to other formats. And there's also free readers like OpenOffice.org, which are open source and so can be modified by anyone with the interest to write or commission new code for them.
But now that the format is well understood, Microsoft needs another way to ensure that it only hands keys out to readers that can be trusted to follow the rules that accompany them. Pages or OpenOffice.org can request a set of document keys just as readily as Office can. Microsoft can try to create secret handshakes to make sure it only gives out the keys to authorized parties, but just as the document format can be cracked, so can the handshaking.
IRM has an answer. Unlike a crippled PDF, a restricted Word file is encrypted. Only authorized readers will get the keys. This technology will return Office users to the days before the file format had been reverse-engineered by competing products like WordPerfect, where reading an Office file meant licensing the file-format from Microsoft.
If anyone makes a client that listens to its owner instead of Microsoft, then the system collapses. No-print, no-forward, revoke and other flags for the document can simply be ignored. Once Microsoft sends a decryption key to an untrusted party, all bets are off -- Microsoft loses its lock-in and you lose any notional security benefits from IRM.