Various tech sites have reported that Skype admitted on eavesdropping on instant messages sent from China.
The company just found out that a text-filter which was designed to block conversations containing sensitive keywords had been altered. The alteration caused the software to store and log conversations.
They apologised and said the filter was altered “without our knowledge or consent.”
Researchers from Citizen Lab which is based at the University of Toronto found that some of the keywords that were censored and logged are Falun Gong, democracy, and milk powder.
Source: The Register

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Just to clarify – the issues highlighted in the Citizen Lab report affect only the TOM-Skype software distributed in China. Standard versions of Skype are unaffected, and Skype-to-Skype conversations between users of standard versions remain completely secure and private.