While Skype calls used to be secure from government or private snooping, changes made by Microsoft have made it possible for the government(s) to do just that. According to documents obtained from whistle-blower Edward Snowden by UK newspaper The Guardian, the U.S.'s National Security Agency is bragging about it.
According to the newspaper, Microsoft worked closely with the NSA to allow the agency to circumvent the encryption used by Skype. NSA documents boasted of the inclusion of Skype into its PRISM dragnet surveillance system, calling it a "team sport" to share Skype data between the FBI and the CIA.
Part of this change was based on Microsoft's decision to move Skype from more of a peer-to-peer communications system to a server-based service. By doing so, the company put the encryption in the hands of the servers, which then allowed the company to hand the keys of that encryption over to the NSA.
Microsoft made this change in part because if the growing needs of mobile users who might need push notifications and other server-side services for apps that might be running in the background or not be turned on.
CNet's Declan McCullagh noted that in 2008, before Microsoft bought Skype from Ebay, Skype spokespersons claimed that the peer-to-peer encryption techniques used by Skype would make it impossible for the company to comply with any government subpoenas for communications records.
Not so much now. The NSA documents say that it can listen in on audio, watch video, and that the metadata (IP addresses of the parties, location, and other information), "looked complete."
It's important to note that Microsoft is allegedly handing over information only when ordered by a court—FISA courts effectively never say no, but that's another issue. The point is that the company made it possible for once-secure messages to be decrypted, and that it did so actively.