Coronavirus home work: Zoom sued over security lapses as stock slides
An investor in Zoom has filed a class action lawsuit against the video-conferencing company, accusing it of fudging details about its encryption, hiding security flaws, and disclosing personal information to Facebook.
Bloomberg reports that investor Michael Drieu has accused Zoom of concealing the truth about its platform security. The accusations haven't helped Zoom's stock price, which has skyrocketed over the past month as investors saw people flocking to the platform to work remotely amid the COVID-19 coronavirus outbreak.
Zoom shares were just $68 on January 1 but shot up to a record $159 on March 23. However, they were down to $113 on Tuesday as the company weathers criticisms over privacy, security, and the rise in 'zoombombing', where trolls hijack online classrooms and work meetings.
Due to these security concerns, over the past weeks several major organizations have banned employees from using Zoom, including Elon Musk's Space X and the New York City Department of Education, which instructed teachers to use Microsoft Teams instead.
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And on Tuesday, Taiwan, which isn't on good terms with China, ordered all government agencies not to use Zoom, advising them instead to use Google and Microsoft video-conferencing services. The move followed a Citizen Lab report this week that called out Zoom for sending encryption keys to servers in China, for which Zoom has since apologized and stopped doing.
Nonetheless, as Bloomberg notes, Zoom shares are up 67% this year as investors punt on its massive growth in user numbers.
On Monday, Credit Suisse analyst Brad Zelnick downgraded Zoom stock from neutral to underperform but raised his price target from $95 to $105. He said Microsoft's Teams collaboration and video-conferencing service "remains the most significant competitive threat" to Zoom.
Zoom has seen daily user numbers grow from 10 million in December to 200 million in March. However, the company announced last week that it was suspending development of new features for 90 days as it works to address security and privacy issues uncovered since countries have rolled out coronavirus mitigation strategies.
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In the past two weeks, researchers have found security issues affecting the Zoom Windows client and flaws in the macOS installer for Zoom. Both were quickly fixed by the company, but other issues have also tarnished its image and given Microsoft an opportunity to boast about its superior record for privacy and security.
The company was also forced to update its iOS app after the discovery it was sending iPhone device data, including user IP addresses, to Facebook.
On top of all this, Zoom has taken criticism for misleading consumers about the claim that its video-conferencing platform used end-to-end encryption when it did not.