Skype apologized after a report revealed that the Web service monitors text chats with politically sensitive keywords and stores them along with millions of personal user records on computers that could be easily accessed by anybody—including the Chinese government.

Jennifer Caukin, a spokeswoman for Skype, minority owner of TOM-Skype, admitted to the privacy breach in the servers and said it had now been fixed.

However, she said that Skype needed to have further discussions with TOM after it found out that the venture had changed privacy policies without Skype's consent or knowledge in order to store certain user messages.

Caukin said it is not a surprise that "the Chinese government might be monitoring communication in and out of the country."

"Nevertheless we are concerned to hear about security issues brought to our attention and confirm that TOM was able to fix the flaw," she said, adding that "changes in storing and uploading chats will be further discussed with TOM."

Caukin said in an e-mailed statement that Skype had publicly acknowledged in 2006 that in order to meet Chinese regulations, TOM was operating a text filter that blocked certain words on TOM-Skype chat messages without compromising customer privacy. But she said that policy had changed.

"Last night, we learned that this practice was changed without our knowledge or consent and we are extremely concerned." Caukin said.

TOM Group, the parent company of TOM-Skype's majority owner TOM Online, said in an e-mailed statement that it follows Chinese regulations.

"As a Chinese company, we adhere to rules and regulations in China where we operate our businesses. We have no other comment," it said in the statement.

The comments follow a University of Toronto Citizen Lab report that said text messages sent between TOM-Skype users and between Skype users and T0M-Skype users, are scanned for phrases like "Taiwan independence" or "Falun Gong" or for opposition to the Communist Party of China.

When these keywords are found, the messages and information, such as usernames of subscribers, are stored on publicly accessible Web servers along with an encryption key that could be used to unlock the data, according to the report.

(Reporting by Sinead Carew, with additional reporting by Savio D'Souza in Bangalore, editing by Gerald E. McCormick)

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