Zoom (ZM) Stock Price Falls 5.88%, Company Is Sued for Alleged Data Sales to Facebook

UTC by Christopher Hamman · 3 min read
Zoom (ZM) Stock Price Falls 5.88%, Company Is Sued for Alleged Data Sales to Facebook
Photo: Zoom Blog

Zoom (ZM) stock price is down around 6% after several privacy issues are discovered. The video conferencing company has faced a lawsuit in California and an investigation by the New York Attorney General.

Zoom Video Communications (NASDAQ: ZM) stock price is down 5.88% at the time of writing. Now it is trading at $137.52. Sources say that the popular video conferencing company’s shares fell as a result of concerns about alleged sales of customers data. The company is alleged to have shared data with popular social networking company Facebook Inc (NASDAQ: FB). 

This comes as working from home has become a big trend as governments have instituted movement restrictions across the world. 

New York’s Attorney general is looking into Zoom as a result of a discovery of the alleged practice by Vice. It appears that Zoom’s management has already received a letter from the Attorney General as well. 

That’s not all. Zoom is facing another lawsuit from the State of California as well. The lawsuit alleges that Zoom is giving out users’ data on purpose to outside third parties. Users are allegedly also not informed about this practice. 

Zoom (ZM) Stock Price Falls Due to Privacy Issues

Customer’s information is allegedly given to Facebook once a user logs in to the service. The users’ membership of Facebook is of no consequence as users’ information is shared with the social media giant. 

Both users and non-users of Facebook have been affected as the data is sent to Facebook for unspecified reasons. The lawsuit reads:

“The unique advertising identifier allows companies to target the user with advertisements. This information is sent to Facebook by Zoom regardless of whether the user has an account with Facebook.”

The lawsuit also further alleges that minute details are being transmitted to Facebook. Details such as the devices used, their models, and the unique advertising identifiers are part of the data sent out. 

On its part, Zoom has acquiesced to the practice. It also said that the data-sharing occurred as a result of Zoom accessing Facebook’s Software Development Kit (SDK). This access is to enable users who have Facebook accounts to login to the video conferencing service. 

This also allegedly occurred on its iOS App. The management further iterated that access to the SDK has been pulled from its iOS app. CEO Eric Yuan said in a blog post:

 “Our customers’ privacy is incredibly important to us, and therefore we decided to remove the Facebook SDK in our [Apple-based] client and have reconfigured the feature so that users will still be able to log in with Facebook via their browser.” 

As regards the allegations of sales of data, Aparna Bawa who is Zoom’s Chief Legal Officer said that the company “has never sold user data in the past and has no intention of selling users’ data going forward.”

Zoom Has Several Security Challenges: How Will ZM React?

This comes as online platforms are generally facing security issues. One such example is the “Zoom bombing” attack. This can occur when an unwanted intruder joins a Zoom video conference and posts controversial material such as porn or worse. 

Besides, Zoom’s end-to-end security claims have been also proven to be inaccurately described.

Many apps are known to link up t the Facebook SDK. This comes at a time when individual privacy is threatened by the rise of big technology companies. 

How Zoom stock price will react in the long-term remains unclear. Many investors are hoping this will be the rise of the remote-working movement.

With the stock market itself down by more than 25%, many are looking to companies like Zoom to buffer their battered portfolios. Zoom stock prices have risen by more than 40% since January. It is only a question of time if the stock prices will remain at such levels. 

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