Not sure about LL policy regarding storage of messages but it does not surprise me that they store them. This is the way things are done in the era of modern communications. Most cell phone companies keep an archive of text messages but usually purge them after a short time (week or so?). I assume LL has some purge policy in place but who knows. As another poster mentioned I believe Emerald allows you to encrypt your IMs so if you are really concerned you could go that route. Also, you can log chat and IMs to your local hard drive so if you need the history for some reason you will have it.