Abstract. Even though we increasingly rely on HTTPS to secure Internet communications, several landmark incidents in recent years have illustrated that its security is deeply flawed. We present an extensive multi-disciplinary analysis that examines how the systemic vulnerabilities of the HTTPS authentication model could be addressed. We conceptualize the security issues from the perspective of the HTTPS value chain. We then discuss the breaches at several Certificate Authorities (CAs). Next, we explore the security incentives of CAs via the empirical analysis of the market for SSL certificates, based on the SSL Observatory dataset. This uncovers a surprising pattern: there is no race to the bottom. Rather, we find a highly concentrated market with very large price differences among suppliers and limited price competition. We explain this pattern and explore what it tells us about the security incentives of CAs, including how market leaders seem to benefit from the status quo. In light of these findings, we look at regulatory and technical proposals to address the systemic vulnerabilities in the HTTPS value chain, in particular the EU eSignatures proposal that seeks to strictly regulate HTTPS communications.

HTTPS (Hypertext Transfer Protocol Secure) has evolved into the de facto standard for secure Web browsing. Through the certificate-based authentication protocol, Web services and Internet users first authenticate one another ("shake hands") using a TLS/SSL certificate, encrypt Web communications end-to-end, and show a padlock in the browser to signal that a communication is secure. In recent years, HTTPS has become an essential technology to protect social, political, and economic activities online. At the same time, widely reported security incidents-such as DigiNotar's breach, Apple's #gotofail, and OpenSSL's Heartbleed-have exposed systemic security vulnerabilities of HTTPS to a global audience. The Edward Snowden revelations-notably around operation BULLRUN, MUSCULAR, and the lesser-known FLYING PIG program to query certificate metadata on a dragnet scale-have driven the point home that HTTPS is both a major target of government hacking and eavesdropping, as well as an effective measure against dragnet content surveillance when Internet traffic traverses global networks. HTTPS, in short, is an absolutely critical but fundamentally flawed cybersecurity technology. While the Heartbleed incident illuminated severe flaws in a widely used crypto-library of HTTPS (OpenSSL), the focus here is on the systemic security vulnerabilities in the HTTPS authentication model that precedes end-to-end encryption. Although some of these vulnerabilities have been known for years, the 2011 security breach at the small Dutch CA (certificate authority) known as DigiNotar was a watershed moment, demonstrating these theoretical man-in-the-middle vulnerabilities in the wild. Meanwhile, large CAs such as Comodo and Verisign have experienced breaches as well but didn't suffer similar consequences to DigiNotar. In fact, some large CAs actually benefited from the increased sense of HTTPS insecurity. Policymakers and technologists are increasingly advocating various solutions to address the security collapse of HTTPS. The European Union is halfway through adopting the world's first comprehensive legislation on HTTPS. It will acquire immediate binding force in the legal systems of 28 European member states. As most large CAs operate (also) under E.U. jurisdiction, the legislation will impact HTTPS governance globally. In the U.S., on the other hand, attention has focused on technological solutions and industry self-regulation. To evaluate both legal and technological solutions, an understanding of the economic incentives of the stakeholders in the HTTPS ecosystem, most notably the CAs, is essential. 2,3 This article outlines the systemic vulnerabilities of HTTPS, maps the thriving market for certificates, and analyzes the suggested regulatory and technological solutions on both sides of the Atlantic. The

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