Like all escrowed encryption (encryption that can be broken at need by law enforcement or national security agencies), Clipper was extremely controversial.
Originally, the chip design was classified. Critics argued that this violated Kerckhoffs' Principle; no design should be trusted without publication and independent analysis. Eventually, the design was de-classified. Within weeks, Matt Blaze found a serious flaw.  The design uses a 16-bit "Law Enforcement Access Field" (LEAF) which identifies the key in use to police or security personnel who need to tap the conversation. Blaze showed that it is easy to forge this field, replacing the legitimate LEAF with a value that passes the protocol's validity checks but is of zero value to eavesdroppers.
Eventually, the US government quietly dropped the Clipper initiative.
- Matt Blaze (1994), Protocol failure in the escrowed encryption standard