Skype was originally marketed as having end-to-end encryption. Now, we know that since Microsoft bought Skype they've added wiretapping support, which works by making themselves a man-in-the-middle. They claim they only do this temporarily for people they are actively wiretapping.
This, however, shows that Microsoft regularly MITMs you, for the purpose of evaluating whether links are dangerous. This means that basically all of Skype's former privacy claims are no longer true. They simply regularly look at your unencrypted traffic, which means that they are a target for attackers, governments, and pretty much anyone who wants to eavesdrop or read your messages.
MITM usually refers to 3rd parties routing your traffic. So if your ISP or network admin was sniffing your Skype messages, that would be what is generally called MITM.
http://seclists.org/fulldisclosure/2013/May/80
It's concerning.
I for once disagree here that such actions are innocent. When peoples private conversation is read and interpreted, even by a machine, most people still get a feeling of lost security. This in turn causes a real problem from lower personal security, increased mental stress, and social self-imposed restrictions.
A server is a black box controlled by someone else. They may tell you it'd doing X but there's no way to verify that.
Well obviously, a machine is reading your confidential messages, if only to scan them for links. In the most benign case, the link scanning could be done in the skype client (closed source software on your machine), and MS's servers are seeing a list of links + an encrypted message.
But we just don't know, do we?