THERE IS A future that is terrifying to the culture industry. When described at all, it is called the "dark net scenario." The dark net is one of many possible outcomes of our generation's intellectual-property wars over digital information, an outcome in which information has been liberated – if you've got cash. Corporate giants who own copyrights and patents will compete with info-pirates and mercenary hackers to sell digital goods. All proprietary information, from movies to expressed gene sequences, will be available for a price. Buyers will be able to go the legit route and purchase from rights holders or get what they want from the dark net, the black e-market.

To nip this possible future in the bud, U.S. entertainment companies have pushed for laws that severely punish copyright infringers and narrow the definition of fair use. The Digital Millennium Copyright Act, the Consumer Broadband and Digital Television Promotion Act, and upcoming anti-peer-to-peer legislation are all the brainchildren of entertainment execs and the politicians like Sens. Fritz Hollings and Dianne Feinstein whom they've paid to protect their interests. The idea is that if we can make digital piracy as risky and dangerous as possible, nobody will have any incentive to create the dark net. You know – just the same way the war on drugs kept people from selling crack in the ghettos.

The media have portrayed high-tech companies (and products) as the biggest enemies of media copyright holders in the battle to secure the future of the net. But in reality the situation is not nearly so clear-cut. Case in point: Microsoft's new multipurpose product known as Palladium. Built under the rubric of the Trusted Computing Platform Architecture – a technology that, in part, creates special zones on microchips where "trusted" information can be stored unmolested – Palladium is Microsoft's attempt to make nice with copyright holders. The secure area on a Palladium-enabled microchip will be hardwired to contain codes and keys that uniquely identify the user. Using Palladium, entertainment companies can identify who has purchased the rights to a DVD, for instance, and give those people permission to play (or copy) the DVD on their computer.

The beauty part, at least for those who want the all-white net, is that it's virtually impossible to hack the codes. Each is unique, each is written into the hardware. You'd literally need an electron-tunneling microscope to tamper with the Palladium infrastructure.

Microsoft reps say Palladium treats consumer privacy and corporate copyright protection as the same problem. If true, that means the software giant has reconciled the interests of two groups often presumed to be at odds: consumers who want to protect themselves from being spied on by corporations, and corporations who want to protect their copyrighted property from being pirated by consumers. Palladium finesses this contradiction by offering consumers the security they crave in a world of menacing, half-understood worms, viruses, and dastardly hackers. Supposedly, the unhackably secure area on the Palladium-enhanced chip can help users encrypt their data and determine if their privacy has been compromised, though Microsoft isn't sure how exactly this feature will work. Users would also be "trusted" more by companies. For instance, a bank could allow users more online functionality, so the logic goes, because Palladium makes it so difficult to spoof a customer's identity.

All this glorious privacy and security hinges on giving you a piece of technology that will make it trivial for anyone dealing with you online to know exactly who you are – a scary prospect for people who want the option of protecting their digital privacy. Working with chip-maker Intel, Microsoft is aiming to make Palladium ubiquitous. You'd think that a situation like this one would be raising the hackles of digital freedom-fighting groups like the Electronic Frontier Foundation, but instead it has just created an alarming state of ambiguity. EFF fair-use crusader Fred von Lohmann says he can't in good conscience condemn the technology without seeing how the market will put it to use. Even the EFF's resident geek, Seth Schoen, admits the Palladium technology is appealing in certain ways.

At the heart of this ambivalence is the ideal of the free market. Von Lohmann says there are a number of problems with Palladium, chief among them being that entertainment companies may require you to have Palladium in order to play CDs or DVDs, which is tantamount to coercing you into buying more tech. But, he argues, the fact is that Microsoft isn't necessarily pushing for Palladium to be used for what Richard Stallman calls "digital restriction management." It could be used for better authentication and privacy. Microsoft just wants to sell shit to the highest bidder, and that, friends, is the American free-market way. If the highest bidder happens to be a copyright-holding conglomerate, so be it.

But of course no market is ever free. Palladium is not being born into a world made of fairness and invisible hands. Instead, it's being released into a highly charged political battle for the future of digital property and consumer rights. Can we really afford to take no stand? To let the market sort it out? I, for one, do not trust the market to make my computer "trustworthy." And neither should you.