India Asks RIM, Google, Skype to Set Up Local Servers

India said it will ask Research In Motion Ltd., Google Inc., Skype Technologies SA and other service providers to set up servers locally and enable security agencies to monitor mail traffic.

“They have to install servers in India” and “this applies to all,” Home Secretary G.K. Pillai told reporters in New Delhi yesterday. Notices will be sent to the companies for “lawful access” by the security agencies, he said.

The Indian government, concerned that terrorists may take advantage of the encryption in smartphones to plan attacks or other illegal activity, is urging equipment makers and service providers to come up with solutions to meet its security needs. RIM, the Canadian maker of BlackBerry phones, averted a ban on Aug. 31 by conceding access to the e-mail and instant-messenger traffic on the device.

India started testing RIM’s monitoring tools yesterday to see if they allow security agencies to tap its messenger- and enterprise mail services, Home Minister Palaniappan Chidambaram said in New Delhi. Discussions for further access are continuing and the steps will be reviewed in 60 days, he said.

A ban would have affected more than a million users and halted the company’s expansion in the world’s second-biggest mobile-phone market.

Closely held Skype, whose investors include EBay Inc. and private equity firm Silver Lake of Menlo Park, California, hasn’t received any notification from the government, spokesman Brian O’Shaughnessy said in an e-mail yesterday. The company provides software that lets more than a half billion users make telephone and video calls over the Internet.

Google hasn’t received any request from India to set up local servers, Jessica Powell, the company’s spokeswoman in Tokyo, said today.

Location Is ‘Irrelevant’

RIM’s Mumbai-based spokesman Satchit Gayakwad declined to comment by e-mail, referring to an Aug. 26 statement the company made that said the location of infrastructure is an “irrelevant” factor from a security perspective because information is encrypted end-to-end.

Waterloo, Ontario-based RIM gained 3 percent to close at $44.13 in Nasdaq Stock Market trading yesterday. Google rose 2.3 percent to $460.34.

Nokia Oyj will set up local servers by Nov. 5 to enable security services to monitor its pushmail services, D. Shivakumar, managing director of the Finnish company’s Indian unit, said on Aug. 30.

To contact the reporters on this story: Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net; Ketaki Gokhale in Mumbai kgokhale@bloomberg.net.

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