Skype has recently come under public scrutiny for apparently acting counter to its highly regarded privacy policies in the international marketplace. The popular Internet phone company, owned by eBay, uses encryption technology to prevent eavesdropping and ensure that only the end to end users are able to access their messages. The company asserts that it does not store information and that it discards all messages.

Recently a Canadian researcher, Nart Villenueve, discovered that the Chinese version of Skype snooped on and archived text chats. The Chinese version of Skype, which is distributed by Skype’s Chinese partner TOM Online, admittedly has a filter function; the surprise in this story regards Villanueve’s ability to access stored communications that were never supposed to exist. According to Villanueve’s research, TOM Online’s software filters for buzz words including “Tibet” and “democracy.” Messages caught by that filter are then stored on TOM’s network. Due to a security breach, Villanueve was able to access a server containing 166,000 censored messages from 44,000 users.

Skype’s president has defended the TOM filtering technology as the cost of doing business in today’s global marketplace, however, and has acknowledged that the storage of the censored messages violated its stated practices and agreements with TOM. Despite Skype’s admission of error and assurance that only conversations in which one or more parties were using the Chinese version of Skype were affected, consumers are concerned about the effect of this practice on international and American customers.

Skype’s blunders are the latest controversy involving corporate assistance in curtailing speech rights in restrictive countries like China. Yahoo! Inc. has been highly criticized for its role in the imprisonment of Chinese journalist, Shi Tao. Shi Tao used his private Yahoo! e-mail account to send information to an overseas news website against a Chinese mandate prohibiting reporting on the anniversary of the Tienanmen Square protests. When the Chinese government asked Yahoo! about the owner of the e-mail account, it released Tao’s personal information without question. Many people believe that large corporations such as Yahoo! should not be so quick to act in cooperation with governments to jail people for expressing their opinions electronically. A critic at Hong Kong University commented about the Skype controversy:

“We may never know whether some of those people whose conversations were logged have gone to jail or have had their lives ruined in various ways as a result of this.”

Further complicating the Skype situation is the potential impact on American users. While Skype has emphasized that this particular issue only arises in the Chinese version, many are wondering what would happen if Skype was called on by the U.S. government to eavesdrop on U.S. users. In 2004, the FCC ruled that broadband and VoIP networks must be wiretap ready, and in 2006 a court held that the FCC had acted within its authority in making the mandate. Skype has reported that they have never been called upon to perform eavesdropping on U.S. users and, in any case, some of Skype’s services may fall outside the FCC’s ruling. However, the question remains – if the U.S. government calls upon Skype to eavesdrop on its users, will the company remain faithful to its privacy guarantees?

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