As more and more people put their tax return, financial information and stock portfolio data on the same PC they use to connect to the outside world via the Internet, it pays to be a little paranoid about privacy. My paranoia flared up when I recently installed "Microsoft Office XP" and was confronted with its new "activation" system. The more I learned about it, the more this computer curmudgeon could envision a huge potential for abuse.

Installation begins by loading the CD serial number printed on the jewel case. This old anti-piracy technique allows the program to recognize an invalid code. Its effectiveness is limited because pirates can simply use the same valid number each time they install the software. The computer never knows the difference. Microsoft's new activation process is designed to be much more sophisticated. It takes the CD identification number, assesses the components of your PC, assigns values to each component, and -- through a secret mathematical formula -- derives a code that you're required to send to Microsoft. Microsoft, in return, generates another code that you load into your computer to complete the activation process, giving you unlimited use of "Office XP" (or the "XP" operating system, which uses the same anti-piracy technique).