IBM had Commercial Data Masking Facility which did key shortening to turn a 56 bit cipher into a 40 bit one.
Now we've got this weird interaction which similarly reduces key length.
Seems pretty obviously intentional?
Maybe 40 bit was seen as sufficient at the time, but are there any engineering reasons to actually shorten the key intentionally, does it improve the transfer rate in any way?
I can't think of any, but I'm no expert, so maybe somebody else can chime in?
And as far as the other half of your question, no, there's no possible benefit (other than to the backdoor owners) from a smaller keyspace, as it goes through the motion of encrypting with the larger one.
Some situations, rather than designing new codecs, they would just weaken key gen side. The IBM effort there was public to allow for easier export, but also an approach that could be used to hide the weakness which in other settings may have been beneficial. It's possible however that folks involved understood what was going on to a degree but that it was seen as necessary to avoid export / import restrictions.
More recently I think places like China ask that the holders of key material be located in country and make the full keys available or accessible to their security services. Not sure how AWS squares that circle unless they outsource their data centers in China to a third party that can then expose the keys for China to use.
If you check something like the Public Suffix List [1], you will notice that Amazon maintains separate com.cn domains for several of its services in China. Amazon doesn't appear to do that for any other country. It follows that AWS in China might well be isolated from AWS elsewhere.
With KMS actually the only thing that prevents encrypt/decrypt from anywhere on the Internet is the access control logic of the service. AWS of course hold the private keys for ACM certs too and could provide them upon request. (Side note: the KMS "BYOK" functionality is almost completely useless).
Realistically you should expect any cloud-hosted infrastructure to be fully transparent to relevant authorities. This is usually not a business problem.
This is in fact precisely what they do. The Beijing region is operated by Sinnet and the Ningxia region is operated by NWCD. It's documented here: https://www.amazonaws.cn/en/about-aws/china/
If I make a product for global use and Russian use, am I malicious for telling Russian customers that I’ll cut out information on homosexuality by Russian law? Or is the malice in Russia requiring that? Can we expect companies, especially international conglomerates, to give up on potential markets in order to protest a law?
(This is not a caricature, this is more or less what a couple of Russian acquaintances working on YouTube at Google tell me. One could also say the same, mutatis mutandis, for China or India or Saudi Arabia, but I know much less about what’s happening there. Also intentionally not the most outrageous example, only the one that hopefully hits closest to home for a Western audience.)
For example, I don't think James Comey was acting with malicious intent calling for universal crypto back-doors; I do however think that he was dangerously naïve and deeply wrong-headed.
No back-door will ever remain unbreached and by baking vulnerabilities into the specification you're paving the way for malicious manufacturers to exfiltrate your network's communications as they see fit.
There's a reason that 5G rollouts have national security implications and they could've been largely avoided (metadata aside).