What Is OAuth?

OAuth is one of the most important authorization protocols. There can be many benefits to using OAuth. In this blog, we give you an overview of the OAuth standard and examples to help you get started.

What Is OAuth?

OAuth is an open standard for authorization that enables an application to request access to third party systems on behalf of its users. OAuth stands for Open Authorization. It was developed out of the process of improving the OpenID standard by securing access to multiple systems on behalf of a single client.

The Development of the OAuth Standard

The industry has been trying to solve the authorization dilemma for a number of years. In 2006, Blaine Cook, then serving as Lead Developer at Twitter/X, confronted it when he was working on the Twitter/X implementation of OpenID.

OpenID did not provide for the delegation of API access. Cook, along with others in the industry that were struggling with the same issue, came together to develop the OAuth standard. The standard was published by the Internet Engineering Task Force (IETF) in 2010 (Version 1.0) and updated in 2012 (Version 2.0).

OAuth vs. OpenID

There’s nothing wrong with OpenID. It was just created to solve a different problem. It exists in parallel with OAuth. But it’s worth taking a look at how OpenID works to understand why it was necessary to create OAuth.

OpenID enables you to use your login at one site, such as Google, to access another site. When you use OpenID, the site you are trying to log into asks for a confirmation of your identify from the site you reference. If you log in using Google as your Open ID reference, the destination site will receive a certificate from Google that authenticates your identity.

There are several drawbacks to this approach:

• OpenID does authentication, but it is not set up to handle authorization. You can use OpenID to establish who you are. But the site that lets you in has no idea what you’re entitled to see.
• It assumes that the person requesting access is the same person/entity that controls the requested information resource.
• OpenID requires the direct participation of the individual user, who has to know that he or she can use OpenID to access multiple sites without creating a log in for each one. This requirement has led to uneven adoption of OpenID. Many web users don’t know that OpenID exists or, if they do, what it does.

Why Is OAuth Important?

OAuth is important because of the spectacular rise of sophisticated web applications, mobile apps, and unique business models. Traditional authorization mechanisms simply do not provide an effective solution for sharing data and federating identity among multiple trusted parties, such as Facebook and Twitter/X.

The use-cases have evolved to new scenarios. The user is no longer directly accessing the information. Instead, they are delegating rights to other applications on the users’ behalf to access all or a subset of data.

It’s a simple problem with complicated implications. With a client/server architecture, the client software requests access to information controlled by the server. That assumption is that it’s a binary transaction involving the client (usually operated by one human being) and the server. This is simply not an assumption one can make any longer.

Today, there are many use cases where one server must tap into one or more other servers before it can fulfill a request from a client. Or where a client itself must communicate with multiple servers to complete an action.

This creates a big authentication and authorization headache. For example, let's say a consumer wants to print photos from a social media site at a photo printing service and pay with credit card rewards points. The user has to give permission for the printing service to access their social media photo album as well as their rewards account. The challenge is to do this without requiring the user to give their login credentials to the printing service.

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Common OAuth Examples

You Need Access to Your Full Financial Portfolio From One App

Consider the following scenario: You subscribe to MyBucks, a fictitious online service and mobile app that enables you to see a single report of your portfolios at multiple brokerages. MyBucks could show you your 401K balance at Brokerage A and your IRA balance at Brokerage B on one app screen. To function, MyBucks needs to be able to log into your personal accounts at each financial house where you have a brokerage account. This architecture is shown in Figure 1.

MyBucks could get your account information by asking you for your full log in details (usernames and passwords) and logging into your various brokerage accounts. However, this is not an optimal or wise arrangement. Giving that level of access to your personal financial accounts to a third party exposes you too much risk. It may not even suit MyBucks’ branding goals. They probably don’t want to appear as if they want too much of your private information.

How OAuth Solves the Authorization Dilemma

OAuth was devised to solve the authorization challenge shown in Figure 1.

How can MyBucks get access to your brokerage accounts — which are held by completely separate entities — without giving MyBucks full access to your brokerage accounts?

You only want MyBucks to get your account balance. You don’t want MyBucks to be able to transfer funds, make withdrawals, and so forth.

The OpenID approach enables you to log into a site using credentials from a third party, such as Google or Facebook. But it has numerous limitations that make it far from ideal for the MyBucks use case. The OpenID approach would not be able to restrict the type of information that you might want to restrict MyBucks from having access to. With OpenID, it's all or nothing.

OAuth allows an application to request access to third party systems without the need to share sensitive personal login information with MyBucks. Rather, it creates a secure token that allows one system to access specific information and functionality from another system.

Figure 2 adds more detail to the MyBucks use case to show how OAuth manages the tricky authorization needed for the MyBucks application to function securely. User X requests their brokerage account balances from MyBucks. MyBucks then sends the brokerages a data request containing two unique OAuth tokens, each created expressly for User X at the two respective brokerages.

The OAuth tokens themselves do not contain User X’s personally identifying information. However, based on the trust relationship that has been previously established between MyBucks and each brokerage, the brokerage systems understand that the OAuth tokens are for User X. The OAuth setup and tokens can also be configured to permit MyBucks to have access to some, but not all, of User X’s account information. The OAuth tokens are generated the first time MyBucks need to access information from a specific brokerage on behalf of the user. As part of this, MyBucks requests authorization from the User.

There are several advantages to the OAuth approach. OAuth makes it possible for the owner of information resources, who is typically the end user, to grant access to those resources to any number of parties without revealing personal information. OAuth can also be set up for limited information access rights. The popular metaphor in use is to compare an OAuth token to a car’s “valet key.” Like the valet key that will turn a car on and open the door, but not the trunk, an OAuth token can grant access to a portion of a resource owner’s data but not all.

More OAuth Examples

Other OAuth use case examples include:

Photo Print Service Needs Access to Your Images

You might store your images on a cloud-based service. A third party photo printing service needs access to your images. You log into the image server and authenticate yourself to it. That way, the image server can grant access to the photo printing service using OAuth.. With an OAuth token to identify you and authorize access to your photos, you can grant the photo printing service access to your images without having to share your log in credentials.

The Government Needs Access to Your Smart Electric Meter

Smart electric meters store information about power usage that can be valuable to the government. If the government wants to tap into to that information, OAuth can be used to grant access without having to trust the government with your personally identifying information or log in credentials.

📕 Related Resource: Learn more about Automating Government Compliance and Security

A Website Wants Access to Your Social Graph

When a website wants access to your social graph on Facebook or your Twitter/X feed, it can use OAuth to establish the connection. Many popular sites use OAuth, including Amazon, Dropbox, Facebook, Twitter/X, Flickr, Google, Instagram, and Netflix.

How OAuth Works

Getting OAuth working involves a multi-step process. As shown in Figure 3, the two entities that want to participate in the exchange of OAuth tokens must first establish trust. They do this by exchanging a “shared secret” that consists of Client IDs.

When that trust has been established, it is possible for the requesting entity to set up an OAuth client. The OAuth client sends information requests along with a unique OAuth token that has been created just for the resource owner. The token grants access to data on a basis defined by the resource owner. The token does not contain the resource owners’ user name and password.

In practical, day-to-day use, the OAuth process looks like this:

• A user logs into MyBucks to add Brokerage A’s account to the MyBuck’s app.
• The MyBucks back-end asks the user if he gives permission for MyBucks to access their account at Brokerage A.
• MyBucks will then present a login screen for Brokerage A, asking the user if MyBucks can access data on their behalf.

The process is flowing through the MyBucks app but the user is interacting directly with Brokerage A’s systems. After the permission has been granted, the Authorization Server will create an OAuth token that is unique to the user. The token can outlast the browser session and expire based on policy set by Brokerage A.

The Role of the API in the OAuth Transaction

Application Programming Interfaces (APIs) created using the Representational State Transfer (REST) protocol have become a nearly universal standard today for connecting mobile apps and websites with servers and third party systems.

An API consists of libraries and protocols used as interfaces between software components. RESTful APIs (also referred to as “Web APIs”) use simple, standards-based languages such as JavaScript Object Notation (JSON) and eXtensible Markup Language (XML) and transmit messages using HTTP.

By convention, nearly all web APIs use the same structure and rely on a few accepted REST procedure calls, which are based on Hypertext Transfer Protocol (HTTP): GET, POST, PUT, and DELETE.

Figure 4 shows the workings of the RESTful API in the MyBucks architecture. The request for balance information flows from the MyBucks app to the MyBucks back end servers. The request is written in JSON for the REST protocol and transported using HTTP.

The MyBucks REST API is the communication switchboard for the entire MyBucks system. When the MyBucks back end receives the request from a user for one of the user’s brokerage account balances, MyBucks requests that user’s OAuth token. The user’s app responds with the OAuth token that is sent back to the backend server. MyBucks then forwards the balance request to the brokerage house together with the OAuth token.

RESTful APIs have grown in popularity as the proliferation of mobile devices and innovate web applications creates more demand for connectivity between end users and back-end systems. REST is simple, lightweight, and standards based — an essentially free way to integrate any number of unrelated application using the web.

REST is rapidly becoming part of the corporate enterprise architecture. Businesses, eager to adopt REST to connect with new clients and partners, are increasingly configuring enterprise systems with REST APIs.

Where do RESTful APIs come from? Many are built from scratch using software development tools. However, as REST grows in popularity, most major software development toolsets are now including automated REST API creation capabilities. Packaged software products are also now beginning to ship pre-set REST APIs for simple deployment.

Enterprise OAuth Scenarios

There are many enterprise OAuth scenarios you may consider.

Figure 5 shows how the simple MyBucks use case can be expanded to include multiple enterprise partners. In this example, mutual funds want to access MyBucks’ client portfolios in order to conduct a free investment analysis and make suggestions about new investment opportunities. MyBucks cannot simply grant them access. The individual client must have the chance to review the request for access and either grant or deny access. And, if the client wishes to grant access, MyBucks should ideally enable them to grant selective access — allowing the client to choose whether the fund can review some or all of the client’s portfolio data. OAuth is able to handle the challenges raised by this use case.

After MyBucks has established trust by exchanging secret client IDs with each fund, the funds can ask each MyBucks client if they wish to grant them access to their investment portfolios. If the client agrees, the fund gets a unique OAuth grant it can use to request the portfolio data.

This a great use of OAuth. The client gets the benefit of an investment review without having to give a relatively unknown entity its log in or identifying information. In addition, the funds can review all of MyBucks’ clients’ portfolios in aggregate, giving each client the advantage of an account overview they could never get on their own. The fund benefits because it is able to prospect for new clients. MyBucks benefits because it can offer a value-added service to its clients and perhaps earn fees for helping the funds sign up new clients. OAuth makes it possible.

Effective, Efficient Approaches to Enterprise OAuth

The enterprise OAuth scenario begs the question:

How can an organization keep track of multiple entities requesting and receiving OAuth tokens? That is, how can it be done without requiring a lot of person-hours and manual, error-prone processes?

The short answer is that OAuth management should be folded into the broader security automation and governance platforms already in use. Akana has taken this approach, embracing OAuth as part of its overall API management solution.

OAuth management is a natural extension of the API management functionality. The Akana API platform provisions API access selectively to app developers and manage APIs throughout the plan/build/run/share lifecycle of the API. It then lets users connect existing security systems by using OAuth. 

Watch the short video to see how quickly you can apply OAuth with Akana.

From a security perspective, the OAuth transaction is really just part of an overall trust relationship. An entity that is not trusted in general should not be able to request and receive OAuth tokens. This could easily happen if API versions are not managed. Especially in today’s enterprise API reality, where there may be scores of APIs in development and production, connecting to myriad third parties, at any given time.

It also makes sense to unify the management of individual operations enabled by the API with the selective access granted by the OAuth token. To understand what this means, consider that most APIs expose more than one type of backend functionality. A single API might contain operations that make distinct types of information available to client applications.

For example, a bank API might have operations for account balance query, transaction confirmation, and stop payment. The OAuth tokens issued against this API should ideally be able to specify precisely which operations are allowed and which are not. And, most importantly, this granular access control needs to be at least partly automated. If it isn’t, the administrative burden on the OAuth process will be too high.

Get Started With OAuth

Enterprises need to share their own data, and the data of other organizations, freely and securely among web applications, mobile devices, and through APIs.

This is the purpose of OAuth:

Easy access to and transmission of secure information.

Akana makes it possible. With Akana, you can:

• Utilize OAuth for authorization. 
• Gain a powerful, automated solution for implementing OAuth.
• Ensure resilience by letting Akana do the heavy lifting.
• Enable flexibility to manage access in one spot. 

See for yourself how Akana can help you ensure security and accelerate time-to-market.

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Note: This blog post was originally published as a white paper in August 2015 and has been updated for accuracy and comprehensiveness.