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Video Chat is always greyed out in Empathy (Yahoo and MSN contacts have the same issue) (2.32.1), however, video chat in Skype (Beta) Works 100% perfectly.

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According to the Empathy FAQ it only works with certain protocols:

Currently for SIP/XMPP/Gtalk. MSN support is currently broken due to change Microsoft has done to their server, see this blog post for more detail.

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