Skype is a P2P VOiP program. It uses the open iLBC codec to encode voice data. The protocol is proprietary and disguised to stop reverse-engineering.
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:
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.
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.

For all the outrage over the Chinese government spying on Skype users, when it comes to privacy, consumers value the talk rather than walk the walk. We often don’t want the inconvenience that security requires (sometimes even re-entering passwords is too much), which can be a difficult line to walk for entrepreneurs seeking to entice users to their online services.
Jason Devitt, founder of mobile bill tracking software maker Skydeck, told me recently that the company dropped its requirement that users download a browser toolbar. It also tweaked some other settings, trying to make life easier for consumers and by extension, attract more users. The catch? Those features were there to protect users, to give them the ability to hang onto and control their own data. Turns out, that’s a bit too much work. Devitt explained:
Rather than ask you to trust us with the username and password for your cell phone account, we forced you to download a browser toolbar. When you put your credentials into that they never left your PC - the toolbar logged in to your cell phone account to fetch your data and relayed it to Skydeck. Again, some people appreciated this. But most people told us that installing a toolbar was just too much work.
So Devitt is still committed to keeping data secure, but Skydeck now asks new users for their credentials directly and logs on for them. Users like it, and Devitt has learned a bit more about the value of usability over privacy. This is a bummer for those of us who think that perhaps a slight lack of convenience is a small price to pay for keeping your data safe. Any other startups out there finding it hard to walk this line?
Incidentally, I have been using Skydeck for a couple of months now and really like it. It’s gone from being a gimmicky way to see who I called most often to a useful tool to track sources and my daily communications.

Nintendo held a media summit here in San Francisco yesterday, and while the biggest buzz was centered around holiday games and the upcoming DSi, I’m way more excited by the announcement that a Wii Speak Channel will launch this November. I’m calling it “Skype for the living room.”
The Wii Speak peripheral, a multidirectional “community microphone” with a reception radius of up to 12 feet, was mentioned this summer, but only in relation to the upcoming online game Animal Crossing: City Folk. Now Nintendo tells us they’re also going to sell Wii Speak separately, and that it’ll come with its own non-game Wii Channel, where you can communicate simultaneously with up to three other Wii owners. (Assuming they also have Wii Speak, and you’ve all exchanged friend codes.) You’ll also be able to use the channel to leave voice mails and exchange image files.
The reason I’ve dubbed the Wii Speak Channel Skype for the living room, however, is because it’s a VoIP communication device that doesn’t depend on a computer or a headset mic. If it works as billed, it could be used not only to make free person-to-person calls, but to hold conversations between entire rooms full of people. Of course the Nintendo exec who briefed me kept emphasizing the gameplay possibilities, and those are nice. But considering the tens of millions of people around the world, from every walk of life, who already own the Wii (it’s forecast to be in 30 percent of all American homes by 2011), the Wii Speak Channel has the potential to become a popular communication alternative over the next decade. Throw in a large enough networking effect, and it could even wind up as pervasive as Skype itself. That’s on the highly optimistic end, of course; at the very least, it’ll be a fun-and-games speakerphone for Wii owners.
Image: Geek.com.
