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Zoom Video sued by shareholder for fraud over privacy, security flaws

  • The company and its top officers are accused of concealing the truth about shortcomings in the app’s software encryption

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In this April 18, 2019 file photo, Zoom CEO Eric Yuan attends the opening bell at Nasdaq as his company holds its IPO in New York. Photo: AP
Bloomberg
Zoom Video Communications was accused by a shareholder of hiding flaws in its videoconferencing app, part of a growing backlash against security loopholes that were laid bare after an explosion in worldwide usage.

In a complaint filed Tuesday in San Francisco federal court, the company and its top officers were accused of concealing the truth about shortcomings in the app’s software encryption, including its alleged vulnerability to hackers, as well as the unauthorised disclosure of personal information to third parties including Facebook.

Investor Michael Drieu, who filed the suit as a class action, claims a series of public revelations about the app’s deficiencies starting last year have dented Zoom’s stock price – though the shares are still up 67 per cent this year as investors bet that the teleconferencing company would be one of the rare winners from the coronavirus pandemic.
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From Elon Musk’s SpaceX and Tesla to New York City’s Department of Education, agencies around the world have begun to ban usage of an app that has risen during the coronavirus lockdown as a home for everything from virtual cocktail hours to cabinet meetings and classroom learning.

On Tuesday, Taiwan barred all official use of Zoom, becoming one of the first governments to do so.

Zoom Chief Executive Officer Eric Yuan has apologised for the lapses, acknowledging in a blog post last week the company had fallen short of expectations over privacy and security. Cybersecurity researchers warn that hackers can exploit vulnerabilities in the software to eavesdrop on meetings or commandeer machines to access secure files.

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