Zoom Video Communications Inc. was slapped with a class-action suit on Tuesday by one of its shareholders, accusing the video-conferencing company of overstating its privacy requirements and refusing to disclose that its service was not encrypted end-to-end.
Shareholder Michael Drieu argued in a court filing that a series of recent media stories exposing the privacy vulnerabilities in Zoom’s application contributed to a plummeting of the company’s shares, which had been rallied at the beginning of the year for several days.
Shares of the firm closed down on Tuesday about 7.5 percent at $113.75. Since hitting record highs in late March they have lost nearly a third of their market value.
Last week, Zoom Chief Executive Eric Yuan apologized to customers, saying the company had fallen short of the community’s standards for privacy and protection and took measures to address the issues.
Zoom has sought to address protection problems as it accepts millions of new users from around the world as people are forced to operate from home after lockdowns have been forced to limit coronavirus spread.
However, the company faces a backlash from users concerned about the lack of end-to-end security of meeting sessions and “zoombombs,” where uninvited guests crash into meetings.
Elon Musk’s SpaceX rocket company recently barred its workers from using Zoom, citing “serious concerns regarding privacy and protection,” while Taiwan’s cabinet ordered government agencies to stop using the app.
The case number is 5:20-cv-02353, which has been filed in the United States. District Court for the California Northern District.
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