P2P voice calling service Skype is under investigation in Luxembourg after it was accused of passing confidential information over to the National Security Agency (NSA).
The company faces harsh criminal and administrative sanctions from Luxembourg's data protection commissioner and the EU, including a ban on associating with the US agency.
According to the Guardian, the European based company could also be fined if it is found their links to the NSA are in violation of the country's data-protection laws. Skype is being allegedly investigated by Luxembourgian authorities after data sharing accusations emerged in June.
The company- which was almost named Skyper- could join Yahoo, Google and Apple as a leading company to have contributed to the NSA. The company was sold to eBay in 2005, and eventually Microsoft in 2011. This rapid change of ownership could have led to the increasing compliance with the NSA, according to documents obtained by the Guardian.
When it began in 2003, Skype was known for its secure peer-to-peer phone calls, which meant voice communication data were not routed over a centralised network. The Scandinavian company quickly built a reputation for being a reliable and trustworthy means of communication. Eric King, the head of research at human rights group Privacy International, says Skype users should no longer trust the voIP service.
"The only people who lose are users. Skype promoted itself as a fantastic tool for secure communications around the world, but quickly caved to government pressure and can no longer be trusted to protect user privacy."
Luxembourg's data-protection chief, Gerard Lommel, declined to comment for the Guardian story citing an ongoing investigation.