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Popular video telephony provider Zoom Video Communications bows to pressure and will enable users of all grades to access end-to-end encryption starting from July 2020. ZM stock is down.
Zoom Video Communications Inc (NASDAQ: ZM) is one of the companies that got its value skyrocketed in the wake of the coronavirus lockdown. ZM became a high in-demand app as businesses that went on lockdown preferred it for their virtual meetings. Back in April, the company’s market capitalization rose to about $48 billion toppling the combined market cap of the world’s seven biggest airlines. However, ZM stock performance post-COVID-19 lockdown has not practically supported the momentum it gained during the lockdown.
The video communications stock closed $5.80 lower on Wednesday after losing 2.39%. While the stock has gained a little traction after a few hours of trading with a minimal 0.23% boost, trends do not guarantee sustained growth by the end of trading today.
The underperforming ZM stock may have gotten bloated by security concerns in an earlier position by the company to offer end-to-end encryption service to just two categories of paid users. The company has rescinded its decision to allow users of all grades to have access to the security upgrade. Eric Yuan, the company’s CEO confirmed this in a blog post:
“We have identified a path forward that balances the legitimate right of all users to privacy and the safety of users on our platform. This will enable us to offer E2EE [end-to-end encryption] as an advanced add-on feature for all of our users around the globe – free and paid – while maintaining the ability to prevent and fight abuse on our platform.”
The blog post describes the end-to-end encryption service which the company plans to begin implementing by July in the following way:
“An optional feature as it limits some meeting functionality, such as the ability to include traditional PSTN phone lines or SIP/H.323 hardware conference room systems. Hosts will toggle E2EE on or off on a per-meeting basis, and paid account administrators can enable and disable E2EE at the account and group level.”
Impact on ZM Stock
A major fear about ZM is the possibility of third parties particularly hackers and government entities eavesdropping on user’s conversations. Confidence will be restored among users who would have otherwise switched to the available options like Microsoft Teams, Google Meet as well as offerings from Facebook Inc (NASDAQ: FB) and Cisco Systems Inc (NASDAQ: CSCO).
For a business that wants to thrive, ZM has exhibited the will to put customers’ privacy ahead of any extant policies the company currently operates by. With this flexibility, market observers are optimistic about the sustained growth of ZM.