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Zoom Shares Pull Back As Company Sued For Personal Data Breach

Popular video-conferencing company Zoom Video Communications (ZM) is facing a privacy suit for allegedly disclosing personal data to third parties without full user consent. Shares pulled back 3.6% in trading on March 31.

The complaint states that Zoom’s “wholly inadequate program design and security measures have resulted, and will continue to result, in unauthorized disclosure of its users’ personal information.” Robert Cullen of Sacramento alleges that Zoom violated California’s Consumer Privacy Act. He is looking to represent a class of users harmed by the breach, and is seeking damages under the act and punitive damages.

Indeed, tech publication Motherboard recently disclosed that Zoom’s iOS app was sharing data with social media giant Facebook (FB). However Zoom was quick to respond by removing the code responsible.

“Zoom takes its users’ privacy extremely seriously. We originally implemented the ‘Login with Facebook’ feature using the Facebook SDK in order to provide our users with another convenient way to access our platform. However, we were recently made aware that the Facebook SDK was collecting unnecessary device data,” Zoom commented in a statement to Motherboard last week.

“We will be removing the Facebook SDK and reconfiguring the feature so that users will still be able to login with Facebook via their browser” Zoom’s statement continued. The company apologised for the oversight and advised users to update to the latest version of the app.

Despite shares in Zoom more than doubling year-to-date, Wall Street strikes a cautious note on this videoconferencing player. Out of 19 analysts tracked by TipRanks in the last 3 months, 6 rate Zoom a Buy, 12 say Hold, while Goldman Sachs’ Heather Bellini is calling Sell. Indeed the $112.5 average price target now represents a 23% downside from current levels. (See Zoom stock analysis on TipRanks).

According to Bellini, Zoom’s key market of small-to medium-size businesses will be “more negatively impacted by COVID-19,” and as a result she believes retention of these clients will fall to 75% in the first year after COVID-19.

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Harriet Lefton
Harriet Lefton, originally from the UK, began her career as a journalist specialising in the niche world of metal markets. She graduated from the University of Cambridge before becoming a qualified UK lawyer. Now she has turned her attention to the world of financial blogging, covering US stocks, analysts and all manner of things finance-related.

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