Zoom Halts Direct Sales in China, Will Rely on Local Partners

Zoom Video Communications Inc., the popular conferencing app facing scrutiny over whether it transmits data to Beijing, will halt all sales of products in China except through locally based partners.

The company informed Chinese customers that sales will be conducted only through authorized partners from Aug. 23.

“Our go-to-market model in Mainland China has included direct sales, online subscription, and sales through partners. We are now shifting to a partner-only model with Zoom technology embedded in partner offerings, which will provide better local support to users,” the company said in a statement on its website.

Zoom, based in San Jose, California, came under scrutiny last month after it suspended, then reactivated, the account of a U.S.-based group of Chinese pro-democracy activists. U.S. senators urged the Justice Department to investigate whether the popular video apps TikTok and Zoom share private information with the Chinese government. Its announcement came after U.S. Secretary of State Michael Pompeo warned Washington may soon ban ByteDance Ltd.’s TikTok and other Chinese apps for jeopardizing national security.

The company founded by Chinese-born Eric Yuan previously came under fire for not providing end-to-end encryption of its popular video conferencing service, which has surged in popularity during the Covid-19 pandemic. That discovery came after researchers found instances when Zoom meetings and their related encryption keys were routed through servers in China, even though no one on the call was based there.

©2020 Bloomberg L.P.

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