American companies operating in China have what might be considered a tradition of getting in trouble over privacy and censorship, and Skype, the Internet communications company, is the latest to encounter hot water. Its president has done his best to explain the situation.

As Josh Silverman wrote, "In China, TOM is the majority local partner in our joint venture that brings Skype functionality to Chinese citizens." Skype - and anyone who bothered to listen to an old announcement - has known for some time that TOM obeyed Chinese laws requiring them to block messages containing certain terms.

The problems began when it turned out that TOM stored the messages; there's a real concern about what government authorities might have seen them. And what's more, a security breach may have exposed the messages to all other sorts of people.

Silverman wrote, "We were very concerned to learn about both issues and after we urgently addressed this situation with TOM, they fixed the security breach. In addition, we are currently addressing the wider issue of the uploading and storage of certain messages with TOM."

Still, Skype's reputation has taken a big hit due to these developments, and we may see the security and censorship issues have a similar effect on the eBay property's growth.