If you think the private messages you send over Skype are protected by end-to-end encryption, think again. The Microsoft-owned service regularly scans message contents for signs of fraud, and company managers may log the results indefinitely, Ars has confirmed. And this can only happen if Microsoft can convert the messages into human-readable form at will.

With the help of independent privacy and security researcher Ashkan Soltani, Ars used Skype to send four Web links that were created solely for purposes of this article. Two of them were never clicked on, but the other two—one beginning in HTTP link and the other HTTPS—were accessed by a machine at 65.52.100.214, an IP address belonging to Microsoft. For those interested in the technical details, the log line looked like this:

'65.52.100.214 - - [16/May/2013 11:30:10] "HEAD /index.html?test_never_clicked HTTP/1.1" 200 -'

The results—which were similar but not identical to those reported last week by The H Security—prove conclusively that Microsoft not only has ability to peer at the plaintext sent from one Skype user to another, but that the company regularly flexes that monitoring muscle.

In one sense, this shouldn't come as news. Skype's privacy policy clearly states that it may (emphasis added) use automated scanning within Instant Messages and SMS to identify spam and links to sites engaged in phishing and other forms of fraud. And as Ars reported last year, since Skype was acquired by Microsoft, the network running the service has been drastically overhauled from its design of the preceding decade. Gone are the peer-to-peer "supernodes" made up of users with sufficient amounts of bandwidth and processing power; in their place are some 10,000 Linux machines hosted by Microsoft. In short, the decentralization that had been one of Skype's hallmarks was replaced with a much more centralized network. It stands to reason that messages traveling over centralized networks may be easier to monitor.

Perception, meet reality

Still, there's a widely held belief—even among security professionals, journalists, and human rights activists—that Skype somehow offers end-to-end encryption, meaning communications are encrypted by one user, transmitted over the wire, and then decrypted only when they reach the other party and are fully under that party's control. This is clearly not the case if Microsoft has the ability to read URLs transmitted back and forth.

"The problem right now is that there's a mismatch between the privacy people expect and what Microsoft is actually delivering," Matt Green, a professor specializing in encryption at Johns Hopkins University, told Ars. "Even if Microsoft is only scanning links for 'good' purposes, say detecting malicious URLs, this indicates that they can intercept some of your text messages. And that means they could potentially intercept a lot more of them."

Specifics of the Microsoft scanning remain unclear; one possibility is that the scanning and spam-checking happen on Microsoft servers as communications pass through supernodes. Another possibility is that the Skype client on each end-user machine uses "regular expression" programming techniques built into the software and sends only the links to Microsoft servers.

"Either way, the finding does confirm that somewhere along the stream, Microsoft/Skype has the ability to intercept/extract content from your communications though we can't conclusively say where," Soltani wrote in an e-mail to Ars. "For example, even if the scanning was happening client side, it's plausible that MS could be compelled to push a ruleset to the Skype client that just logs/transmits all our activity (similar to what CarrierIQ was doing on the HTC phones)."

Helping to feed this confusion about exactly what measures are taken to protect Skype messages is Microsoft's management, which remains vague about the precise type of encryption its service uses. Asked for comment on this story, a spokeswoman offered a statement that was identical to a single sentence in the privacy policy. The statement didn't address my other question that's equally important: does Microsoft record the links and other content sent over Skype? Eventually I found the answer, and unfortunately it gives Microsoft all the wiggle room it needs. It states: "Skype will retain your information for as long as is necessary to: (1) fulfill any of the Purposes (as defined in article 2 of this Privacy Policy) or (2) comply with applicable legislation, regulatory requests and relevant orders from competent courts."

To be fair, Microsoft's scanning of Skype messages isn't too different from techniques Facebook reportedly employs, and what any number of other online services do, too. As Green notes, these companies have a duty to make sure their services aren't abused to circulate malware.

What's different in the case of Skype is the misunderstanding among many users that links and other content sent over the service are private. This misunderstanding is all the more unfortunate given the possibility that this information plucked out of private messages could be logged and retained for as long as some nameless, faceless Microsoft manager deems appropriate. Add to that the fact that a server bearing a Microsoft IP address very well may click on any link you send over Skype and it may not be such a good option for dissidents trying to lay low.

So the next time you use Skype, enjoy the clarity of the voice communications, its generally slick user interface, and its many other benefits. Just don't think the service can't peer into your messages and store indefinitely what Microsoft managers want. It can, and until officials specifically disclose their practices, users should assume it does.