• Market Crumbs

Zoom Faces Criticism

Image via Gabriel Benois on Unsplash

Zoom Video Communications, which provides software for video conferencing and online meetings, has followed the tech startup playbook to a T. The company was founded in 2011 by Eric Yuan, a former lead engineer at Cisco Systems. 

Zoom's usage took off immediately. It quickly surpassed milestones such as 1 million users, then 10 million users and so on. Zoom attracted funding from some of the most well-known venture capital firms, reaching "unicorn" status in January 2017 when its valuation reached $1 billion. 

In April 2019, Zoom went public. Shares jumped more than 70% on the first day of trading, giving Zoom a valuation of nearly $16 billion. 

When the outbreak of COVID-19 started gaining steam, causing millions of people to begin working from home, Zoom's usage and share price took off. Zoom founder and CEO Eric Yuan said the company saw usage jump to 200 million users per day in March from about 10 million users per day in December. 

At its high two weeks ago, shares of Zoom had gained nearly 150% for the year. As usage and Zoom's share price surged, questions about the company's security began to surface. 

A bug was found that enabled hackers to insert links in the chat feature that could be used to steal Windows credentials and launch programs on the user's computer. Zoom has since fixed this issue. 

There's also been a spike in new Zoom domains as cyber criminals try to use phishing scams to steal personal information. Check Point researchers said nearly 2,000 Zoom domains had been created since January.  

"This increase means that hackers have taken notice of the work-from-home paradigm shift that Covid-19 has forced, and are seeing it as an opportunity to deceive, lure and exploit people," said Omer Dembinsky, manager of cyber research at Check Point.

Zoom also faced criticism after researchers found the company routes calls through China. The researchers noted Zoom is "not suited for secrets" and that the company could be forced to hand over data to Chinese authorities. 

Amid the increased use of Zoom has come "Zoombombing," which is when uninvited guests jump into users' calls. The rise of these "hijackings" even prompted the FBI to issue a statement saying "The FBI has received multiple reports of conferences being disrupted by pornographic and/or hate images and threatening language."

The issues have already caused multiple state attorneys general to look into Zoom's privacy and security practices. Ohio Senator Sherrod Brown sent a letter to the Federal Trade Commission asking them to look into the company for "deceptive" security claims. 

School districts such as Nevada's Clark County Public Schools and New York City's Department of Education have already banned the use of Zoom. 

"Providing a safe and secure remote learning experience for our students is essential, and upon further review of security concerns, schools should move away from using Zoom as soon as possible," said a spokesperson for the New York City Department of Education.

As shares of Zoom have fallen nearly 30% since last month's high as security and privacy issues pile up, the company now has prove to its users it can be trusted. 

"We moved too fast... and we had some missteps," Yuan said. "I really messed up."

Leftover Crumbs

  • Yellen speaks. Former U.S. Federal Reserve Chair Janet Yellen spoke to CNBC yesterday, giving her view on the current state of the economy. "If we had a timely unemployment statistic, the unemployment rate probably would be up to 12 or 13% at this point and moving higher," Yellen said. Despite saying the numbers look like the U.S. is in a depression, the numbers are "in very different form" from the Great Depression. "This is a huge, unprecedented, devastating hit, and my hope is that we will get back to business as quickly as possible," Yellen said. 

  • Time to issue more debt. National Economic Council Director Larry Kudlow said the White House is looking into the idea of issuing coronavirus-related bonds. "We’re just looking at it ... let’s see where it leads," Kudlow said. "This would be a long-term investment into the future of American health, safety and the economy. From my standpoint, technical considerations aside, I think the concept is exactly right."

  • Aren't they all bad? JPMorgan Chase & Co. CEO Jamie Dimon sees a "bad recession" this year as a result of the coronavirus. Dimon said JPMorgan's earnings would be down "meaningfully in 2020" but said the bank will not need relief from the U.S. government. JPMorgan may have to cut its dividend, with Dimon saying "If the board suspended the dividend, it would be out of extreme prudence and based upon continued uncertainty over what the next few years will bring." 

  • iFaceShield. Apple will design and produce face shields for medical workers, with the goal of producing 1 million per week. "We’ve launched a company-wide effort, bringing together product designers, engineering, operations and packaging teams, and our suppliers to design, produce, and ship face shields for health workers," Apple CEO Tim Cook said. "Our first shipment was delivered to Kaiser hospital facilities in the Santa Clara Valley this past week and the feedback from doctors was very positive." 

  • CVS expands drive-thru testing. CVS Health is launching drive-thru rapid testing for COVID-19 in Georgia and Rhode Island. CVS will use Abbott Laboratories’ testing kits and hopes to complete 1,000 tests per day. CVS already has a drive-thru testing site in Massachusetts, however, it is only available to first responders. The new sites are open to everyone, but they must preregister and prequalify online before they will be tested.