Clipper is an encryption chip developed and sponsored by the U.S. government as part of the Capstone project (see Question 150). Announced by the White House in April 1993 [OPS93], Clipper was designed to balance the competing concerns of federal law-enforcement agencies with those of private citizens and industry. The law-enforcement agencies wish to have access to the communications of suspected criminals, for example by wire-tapping; these needs are threatened by secure cryptography. Industry and individual citizens, however, want secure communications, and look to cryptography to provide it.
Clipper technology attempts to balance these needs by using escrowed keys. The idea is that communications would be encrypted with a secure algorithm, but the keys would be kept by one or more third parties (the "escrow agencies"), and made available to law-enforcement agencies when authorized by a court-issued warrant. Thus, for example, personal communications would be impervious to recreational eavesdroppers, and commercial communications would be impervious to industrial espionage, and yet the FBI could listen in on suspected terrorists or gangsters.
Clipper has been accepted as a U.S. government standard, but the use of Clipper for business with the government as well as communications within the government is voluntary. A number of vendors, including AT&T, have announced products based on the Clipper chip.