Even for a colorful speaker like Steve Ballmer, it was an impassioned performance. Like a hotshot trial lawyer working the jury, the Microsoft CEO clenched his fists, gritted his teeth, alternately whispered sweetly and shouted explosively to the gallery. Delivering the closing keynote at the company's annual Financial Analysts Meeting, he turned to the subject of Passport.

Microsoft has been accused of an array of crimes over its plans to implement this online user ID service by hosting a massive centralized database of personal information. The charges: It would destroy online privacy; it would threaten security; it would position the company as an all-powerful middleman between Internet businesses and their customers.People say, 'ooh, is there some big plot here?"' said Ballmer. Then, in Johnny Cochrane rhyming rhythm: "The customer gets to choose how their data is used." Furthermore, he insisted, the businesses that partner with Microsoft and use its .Net services needn't worry either. "They own their own data," said Ballmer. "They own their own customers."

To achieve broad adoption for its Web services platform, Microsoft must win the trust of both consumers and business partners. So Ballmer is out there making promises about privacy and security that will be difficult to break. "There's no other philosophy that makes any sense at all," declared Ballmer, resting his case.

But if consumers and Internet partners buy Ballmer's defense, it's the software giant's competitors who really need to worry. Unlike the browser wars, no company yet has a product to compete with Passport; and Windows XP, which is almost ready to ship, will support no rival service. Microsoft could win simply by being there first, providing the gateway -- maybe the sole gateway -- between users and Web services. Passport's potential to dominate the market raises the stakes in the current antitrust settlement talks.

Passport is a key part of Microsoft's .Net Web services strategy, which entails building a services infrastructure that's integrated with all its products. In the .Net future, your travel service will contact you on your desktop, handheld, pager, smartphone or even game console with a special offer, perhaps a hotel package for dates you've designated in your online calendar. It'll book a plane ticket for you, and on the day of travel it will message you details of the inevitable flight delay. With your pre-approval, these activities will happen automatically.

Inventing new Web services promises to be a fruitful field for software programmers. As Microsoft Chairman Bill Gates was quick to realize, Web services bundled with Office and Windows could extend indefinitely the shelf lives of both of those lucrative monopoly products.

Next year, Microsoft will ship basic components, called HailStorm services, that developers will be able to plug in as "building blocks" for their own Web applications. Later the company will release a flow of its own premium services, code-named Harmony which users will pay for via monthly subscription.

A mechanism for identifying users that isn't tied to their machines but resides in the "Internet cloud" is a crucial piece of the plumbing. Passport will be the ID service for all Harmony services and for any Web app built from HailStorm components. Starbucks' e-commerce system will use Passport exclusively. When Gates launched HailStorm in March he openly declared the goal of having "virtually everybody who uses the Internet" registered for a Passport. Windows XP won't deliver full functionality without one. Essentially, Passport is a new platform that will for the first time extend Microsoft's reach directly to consumers.

Passport was developed from technology invented by Firefly. In 1998 Firefly CEO Nick Grouf sold the company to Microsoft for around $40 million and relocated to Redmond for about a year. Now CEO of PeoplePC, Grouf observes with some pride what's become of his baby.

"It's a rare thing to be able to say 'I was involved in helping build the next platform for Microsoft,'" says Grouf. "The Firefly vision is playing out in a very palpable form. In a selfish way it makes you feel good."

"But we're not always selfish," he adds, switching gears. "The consequences of Microsoft's dominance will be potentially quite chilling to the industry."

Grouf sees Microsoft poised to aggregate an unmatchable membership base. Once individuals enter their profile information, it'll be hard for them to switch from Passport.

Microsoft counters that the centralized Passport database poses no threat. Executives say any large partner may choose to host almost all its own data, with Passport acting only as a key to enter that database. The Microsoft servers would hold minimal information on the partner's customers.

And though every significant data exchange will involve a call to a Passport server, Microsoft executives from Ballmer down dismiss assertions that it wants to "take a cut" from every transaction on the Internet. "I don't foresee a world in which users are paying Microsoft for buying things on the Internet," says Brian Arbogast, VP for .Net core services, including Passport.