Skype & the Cost of Playing in China

If you’ve ever seen a Mafia movie, you know that playing nice with the mob is like having the tiger by the tail. It is no different for companies who do business in China, whether on their own or through partnerships. The latest one to experience the downside of this is eBay’s Skype, which has been taking some flack for privacy breaches in the region. 

Citizen Lab, an Internet research group at the University of Toronto, released a report that shows text messages of Chinese Skype users were monitored and their messages blocked if they included political words such as the Chinese Communist Party, the Falun Gong, Tibet, and the great milk scandal.  As a quick background, Skype and TOM teamed up in 2004 and in 2005 released a special software version, TOM-Skype. Since then Chinese users — some 69 million of them — have become a major part, roughly 20 percent, of Skype’s total install base of 338 million.

The report got so much attention that last evening Skype decided to respond. In a blog post, Josh Silverman (Check out my interview with Josh) tries to defend Skype and downplay its role in the China fracas. Here is my translation of the sanitized message he wrote:

  •  This is a TOM Online problem, since they distribute Skype in China.
  • TOM has to play ball and do what the Chinese government asks its to do. (aka regulations that include monitoring and blocking instant messages that the government doesn’t like.).
  • Grow up, censorship is part of life in China.
  •  Hey, don’t blame us. “In April 2006, Skype publicly disclosed that TOM operated a text filter that blocked certain words in chat messages.”
  • This is a China-only problem. On the rest of the Skype network, none of this security breaches and blocking happens — or at least that we know of.

Our challenge is to bring this valuable service to people all over, including China, while being transparent to our users and staying within the boundaries of the local laws. We are committed to meet this challenge.

  • China is so big and important to our installed base that’d we rather not tick off folks there.

As I said, this is what happens when you’re married to the mob. Seriously guys, these compromises are routine and will likely be commonplace. For for-profit entities (despite their slogans), China is a big, growth market and the promise of millions in future profits keeps them from making the right decisions for their shareholders. Sad, but true!

Related link: The Security Breach Report.