The government can't *effectively* outlaw a piece of free software,
since it will be distributed from jurisdictions where it's legal, but
they can harass people, and can scare most vendors away from building
the same capabilities into mass market products.
Seen any DVD players with digital output jacks lately?
All the "trade
secrets" have been legally reverse-engineered, and there's free code
to pull out the raw data so it can be played or copied. DeCSS is
available on thousands of web sites. But somehow you still can't find
consumer drives without the bullshit copy-prevention, and no big Linux
distributions are shipping with the free software players. However,
on the bright side, region-code circumvention is a fait accompli in
many markets outside the US. US consumers are still too dumb to
prefer region-free players.