The U.S. Department of Justice worries about Zoom’s ties with China.
A Justice Department-led panel is investigating Zoom’s deal to buy Five9, an American customer-service software company. As grounds for the investigation, the DOJ cites potential national-security risks posed by the US videoconferencing giant’s China ties.
The Department stated that “Team Telecom”, the interagency panel studying the deal, needed to review a license application that arose from Zoom’s nearly $15 billion deal to buy Five9. The purpose of the examination is to see if it “poses a risk to the national security or law enforcement interests” of the United States. That is according to a letter that appeared on the Federal Communications Commission (FCC) website.
The Department stated there could be a risk from “the foreign relationships and ownership” associated with the application. The Justice Department letter requested the FCC defer action on the application until Team Telecom finishes its review, putting Zoom’s deal for Five9 on hold.
Zoom maintains that all is going according to plan
“The Five9 acquisition is subject to certain telecom regulatory approvals,” a Zoom spokeswoman told the Wall Street Journal on September 20. “We have made filings with the various applicable regulatory agencies, and these approval processes are proceeding as expected.”
Nonetheless, Zoom said they expect to receive regulatory approvals by the first half of next year. If that happens, they could still be on track to close the deal as originally planned.
The U.S. government has been increasing its examination of Zoom’s China ties. Last year the DOJ charged one of the company’s China-based executives with conspiring to disrupt videoconference commemorations of the Tiananmen Square democracy protests. Zoom is also facing multiple ongoing federal investigations related to its dealings with Beijing.
Experts in telecom security said any such negotiations with Team Telecom, which reviews foreign investment in FCC-regulated entities such as Five9, could put Zoom into the crosshairs of officials in the US as well as China, where a significant crackdown on the tech industry is already under way.