The revelation that a Skype joint venture in China has been monitoring its users' communications is adding impetus to an industrywide effort to establish an international human-rights code of conduct for Internet companies.
Canadian researchers reported Wednesday on an investigation of TOM-Skype -- a China-based version of the Internet-based phone-and-messaging service -- which is run by a joint venture of the Skype unit of eBay Inc. and TOM Online, a unit of Hong Kong-based TOM Group Ltd. Probing unsecured servers run by the joint venture, researchers said they found evidence of a system that monitored users' text chats, kept track of who participated in voice calls and stored messages that contain politically sensitive content.
Jennifer Caukin, a spokeswoman for Skype, said practices related to a text filter that blocked certain words in chat messages had been changed "without our knowledge or consent and we are extremely concerned. We deeply apologize for the breach of privacy on TOM's servers in China and we are urgently addressing this situation with TOM."
The report was published by the Information Warfare Monitor and by the OpenNet Initiative-Asia, groups that promote Internet freedom. The groups said Chinese authorities may use the system to track users, but offered no evidence of government involvement.
Foreign researchers, rights activists and others say China operates one of the world's most extensive efforts to censor and monitor information on the Internet.
Some Chinese users believe Skype, which advertises itself as having encryption to "protect users from unauthorized eavesdropping," is safe from government monitoring, and it has been widely used by dissidents. TOM-Skype has 69 million registered users.
Ms. Caukin referred questions about any involvement by the Chinese government to TOM, saying it owned the servers. She said Skype's technology remains "the most secure form of publicly available communications today."
TOM Group said that, "as a Chinese company, we adhere to rules and regulations in China where we operate our businesses."
Chinese police and information industry ministry representatives said they were unable to comment because of a public holiday.
The Skype report comes as a coalition of international Internet services companies, including Google Inc., Microsoft Corp. and Yahoo Inc., are nearing completion of a voluntary code of conduct drawn up in negotiations with human-rights groups, academics and investors. While that initiative isn't focused only on China, many companies, seeking growth in China's dynamic Internet sector, have come under criticism that they've been too helpful in enabling censorship in the country.
Foreign Internet companies say they must abide by local laws to do business in China, and that their presence there does greater good than harm by giving Chinese greater access to information and channels of communication.
In November 2007, Yahoo was excoriated during a congressional hearing on its role in actions that led to the imprisonment of Chinese dissidents. Chief Executive Jerry Yang apologized to the mother of journalist Shi Tao, who was jailed after a unit of the company handed information about him to Chinese authorities in 2004.
The revelation about Skype shows "exactly why we need a global industry code of conduct on free expression and privacy, and why eBay/Skype should be part of it," said Rebecca MacKinnon, a professor at the University of Hong Kong and part of the committee developing the guidelines.
Skype and eBay aren't members of the coalition, though Ms. Caukin said the company was in broad agreement with its principles.
The Canadian investigation said the messages stored on the servers contained keywords relating to political topics such as Taiwan independence, political opposition to the Communist Party, and Falun Gong, the outlawed spiritual group that has been critical of Beijing. Researchers said they also found messages related to business transactions.
Chinese activists have used Skype for chat sessions and conference calls to discuss politically sensitive topics. But many say they've long been wary of TOM-Skype and prefer to use the U.S. version of the program. Some have taken the latest report as a sign there is little communication that is guaranteed to be secret in China -- so they might as well stop fighting it.
"Some human-rights defenders think it may be time to do things more in the open, and take the chance to educate the Chinese government about what human rights is," said Chine Chan, a campaigner with Amnesty International in Hong Kong.
Users of regular Skype can be affected as well if at least one other person in the conversation is using TOM-Skype, said Ronald Deibert, the director of the Citizen Lab at the University of Toronto, which sponsored the research. "If a company as well known as Skype can't be trusted, then who can you trust?"
The episode points to the uncertainty many Western companies face in their Chinese joint ventures. Recently, New Zealand's Fonterra Co-operative Group Ltd., has found itself embroiled in a Chinese tainted-milk scandal because of its 43% stake in Chinese dairy company Shijiazhuang Sanlu Group Co.
The information-industry guidelines, which could be published in the next few weeks, would lay out general principles of freedom of expression and privacy. They would also guide conduct for occasions when local laws require companies to compromise users' data. For example, China's government operates an extensive effort to block politically sensitive Web content and monitor email and other communications, often with the cooperation of Internet companies.
"There are not going to be binary rules that say in all cases do X. They will be flexible guidelines," said Leslie Harris, the president of the Washington-based Center for Democracy and Technology, which is helping to lead the initiative.
In letters written in August to Democratic Sen. Richard Durbin of Illinois, who had urged development of the code, companies said they had reached broad consensus. "Events around the world make a code of conduct not just ideal but essential, as companies and others work to ensure the protection of basic human rights for citizens across the globe," wrote Yahoo Vice President & Deputy General Counsel Michael Samway.