Skype, the voice over IP provider, confirmed April 19 that its partner in China is censoring customers instant messaging conversations.
The admission by Skype means another high-profile Internet company is ceding to Chinese government demands in order to do business with companies in China.
Skype, a division of eBay in San Jose, Calif., is also the latest Internet company to talk openly about the real price of doing business in China.
For Skype, it means that its partner, Tom Online, a subsidiary of leading Chinese language media company TOM Group Limited of Hong Kong, can pluck out certain words from text chats to comply with local laws.
Skypes case is noteworthy because its one of the worlds largest providers of VOIP, which is freely available software to turn an Internet connection into an inexpensive home or office phone. Most VOIP features include IM.
There have been other Internet interests to bow to Chinese government censorship demands. Perhaps the most notable is Internet search leader Google, of Mountain View, Calif., which operates in China knowing full well that some of the Web sites dont get past government censors.
Aside from having to deal with censorship, theres also cooperation with Chinese law enforcement, as Yahoo, of Sunnyvale, Calif., discovered some time back when information it turned over to Chinese authorities led to the arrest of a Chinese citizen.
There have been recrimination and backlash against the two firms for doing so. Yet these and other companies continue to do business inside China, or partner with businesses located there. Why?
Its the business upside. In the case of Skype, the firm gets a much better understanding of consumer tastes in the worlds most populated nation, and can effectively manage partnerships with Chinese businesses and have a better conduit to regulators.
"We cant pretend from London that we know what appeals to Chinese users," Skype spokeswoman Kat James wrote in an IM.