Network computer maker Sun Microsystems and more than 30 other companies unveiled plans for a personal identification system to smooth commerce on the Internet, while allowing users to decide who holds sensitive information about them. The project, which calls itself the Liberty Alliance, represents a clear challenge to Passport, Microsoft’s competing and controversial system, which is also the early leader in the field.

The consortium of companies said they invited Microsoft to link its Passport technology to the planned system, but a Microsoft executive said he knew of no talks and accused Sun of trying to trip up its competition.

Liberty includes Bank of America, General Motors, online auctioneer eBay and mobile handset maker Nokia among others, and it has courted Internet service provider American Online, although AOL declined to comment.

The Liberty group aims to give consumers secure, private identities so that they can do business more readily on the Internet and with mobile phones. Data would be accessible through a single sign-on for convenience but could be stored with various competing companies—a key difference with Microsoft’s Passport system, which has been criticised as giving too much sensitive data to a single company.

Microsoft, which said last week it would expand Passport to include other companies, could emerge as a chief ally or opponent of Liberty. Scott McNealy, Sun’s chief executive and a vocal Microsoft critic, told a conference call Microsoft would be able to set some terms for their participation. “It is really going to be up to AOL-Time Warner and Microsoft whether they want to interoperate,” he said.

AOL, which is a joint venture partner with Sun in the iPlanet e-commerce project and is working on its own Net identity project, Magic Carpet, is considering its options, a spokesman said, declining to comment specifically on Liberty.

— Reuters