It has zoomed to the top of the popularity charts in India, and in many corners of the globe. Zoom Video Communications is the new sensation in virtual communication and collaboration. As a parallel, think of the impact WhatsApp had in India, and Google globally. It’s not quite there yet, but is making that journey. A lot will depend on how it plans for the post Covid-19 world and addresses the security concerns that have tailed it for a while.
From barely 10 million participants globally in December last year to 300 million, and counting, in April 2020, it’s been a heady ride. The company doesn’t disclose its India numbers, but they would be substantial in a country of 1.3 billion. For many Indians, Zoom is already synonymous with video conferencing.
Zoom doesn’t appear to be a shooting star. The San Jose-based company was birthed in 2011 and listed on the Nasdaq in April last year. The market gave an immediate thumbs up to the stock, impressed by its rapid growth, generating cash and profits. The stock spurted 72% on the first day of trading, and – after a lull – unsurprisingly has been on a tear in recent months in a locked-down world.
When Eric S. Yuan, CEO of Zoom, built the video-collaboration platform in 2011 primarily for enterprise customers – large institutions with full IT support – he would not have imagined, a few years later, in a matter of weeks, every person in the world would suddenly be working, studying, and socialising from home.
“We now have a much broader set of users who are utilising our product in a myriad of unexpected ways, presenting us with challenges we did not anticipate when the platform was conceived,” Yuan says.
And he is not kidding you. From courtrooms making Zoom weddings legal to Bill Gates holding “code.org” live streaming with children on pandemic on Zoom, a Microsoft competitor, or even jail inmates using the Zoom interface to talk to their families. The world is coming together on Zoom.
The company has now emerged as a formidable rival to established competitors in video conferencing, such as Cisco’s Webex, Microsoft’s Skype and Teams, Facebook’s WhatsApp, Slack, et al. In fact, a recent survey indicates that Zoom is already the preferred communications platform for businesses in India, even ahead of WhatsApp.
But even as it keeps adding new customers, the company at some point will think of monetising its large free-user base. The stock market clearly seems to have bought into the company’s management for now. Its annual results in January – even before Covid-19 roiled the world – perhaps reassuring investors. It is in the black with a jump in paid customers – 60% to 80% rise on different parameters.
Zoom has four plans for clients: Basic, Pro, Business, and Enterprise.
The Basic plan is free, though it attempts to convert the free customers to paid users. Businesses, enterprises, and companies that pay Zoom for using its product are the customers subscribing through Pro, Business and Enterprise plans that range from USD15 to USD20 and are billed monthly to hosts. It also offers software-based conference-room solutions starting from USD49.
This overnight success of Zoom comes at a time when the video-conference market is already saturated by silicon-valley giants. What magic did Zoom do? Experts point to the ease of getting onto a Zoom call as the reason for its wide acceptance.
Zoom’s easy-to-use interface ensures speedy end-user acceptance and adoption. Zoom saw traction from a wide spectrum of organisations — small-to-very-large enterprises, and industry verticals for which it became a lifeline to stay connected during Covid-19. Its SaaS (software as a service) platform allows remote business teams to connect seamlessly.
Zoom scored over WhatsApp by allowing many more participants in meetings, making for large group conversations tailored for businesses and families. In an exclusive chat with ET Prime, Sameer Raje, Zoom’s head (India) says, “In India we emerge as a clear winner. It’s even more than WhatsApp.”
But with its greater reach has come greater scrutiny, and many challenges.
“Meeting bombing” – the new phenomena?
A new term has been coined recently, “Zoom-bombing”. In regular Zoom calls, uninvited guests have come and showcased pornographic images, posted racist content via hackers. At a time when Zoom’s popularity is zooming, so are the “Zoom-bombing” incidents.
Sources in the Indian government confirm to ET Prime they have witnessed a Zoom-bombing incident at a global conference call held recently by an international telecommunications body. Raje defends Zoom saying, “meeting bombing” will happen at any platform if passwords are not complex and safe.
Some of the first-time users who landed on the platform during Covid-19 did not know how to safeguard themselves. These users didn’t follow best practices, and Raje admits mistakes on Zoom’s part too in features and functionalities. What is Zoom doing about it? He says the platform is “coaching” users about the ways to be safe and secure on Zoom calls. “We have onboarded a lot of Cisco for that, including external advisors and external agencies to improve,” he adds.
But there are other more-serious issues.
Security concerns
Zoom India is firefighting with the Indian government on safety and privacy policies.
Munish Sharma, who is researching on Strategic Technologies at IDSA’s Strategic Technologies Centre, says, “Zoom’s sudden rise brought it under the scanner of security professionals immediately, and the security and privacy shortcomings made to the headlines. Whether it was about leaked videos, intrusion in ongoing sessions, or weaker encryption implementation.”
Many reputed global organisations and enterprises, such as SpaceX, Nasa, German foreign ministry, US Senate, Australian defence forces, NYC department of education, et al. continue to ban its use.
Zoom says it’s working on addressing all the concerns.
In India, the government, too, has been a bit wary of Zoom. The purported Chinese links of Eric Yuan may have a lot to do with it. Yuan in a blog post said Zoom is an American company.
Why is Zoom on government’s radar?
An April 12, 2020, an advisory by the home ministry said, “Zoom is not a safe platform”. It elaborates on India’s computer-emergency team’s (Cert -In) February 6 and March 30 advisories on the same lines.
However, two sources in the government ET Prime spoke to on the advisory say it should be seen merely as a “tool kit” for Indians to safely use the Zoom video platform, which assumed importance due to its widespread use during work from home. This advisory comes as the Indian government continues the world’s biggest lockdown.
Canada-based Citizen Lab also labelled Zoom as an “intelligence target” citing “electronic espionage”. Citizen Lab research also reported on Israeli NSO group Pegasus.
Zoom clarified the routing issues described in Citizen Lab’s research as “temporary” stating Zoom “failed” to fully implement it’s usual “geo-fencing” best practices. The platform fixed the issue on April 3 and its customers are now able to further customise which data-centre regions their account can use for real-time meeting traffic.
Systems are now designed to maintain geo-fencing around China – this ensures that users outside of China do not have their meeting data routed through servers in China. With this “industry-first feature” now, users can route data on any of the 17 data centres.
Security experts say that in its 90-day plan, Zoom has been clearing up its act. Martin Shelton, principal researcher at the Freedom of the Press Foundation, spoke to ET Prime on various video-conferencing (VC) tools and said hosting Zoom on your own server is “good news”. It prevents the company from having access to your video-stream content. However, he points out that the company still has access to the “metadata” – who you spoke to and when.
Zoom has also entered into a partnership with Oracle’s cloud for “core meeting services” as it caters to the widening customer base to address privacy issues.
Is Zoom American or Chinese?
The company has been hit by a double whammy – in China, the company is blocked as it’s seen as an American company. In the US, it’s being criticised for being a Chinese company despite its roots in Silicon Valley. Nancy Pelosi, speaker of the US House of Representatives, also labelled Zoom “a Chinese entity”. Zoom’s Raje maintains it’s an American company without going into details about Yuan’s Chinese links.
Mumbai-based think tank, Gateway House, points to the complex MNC holdings of the company and ascertains that Zoom has a strong connection with China. It cites the following reasons.
Zoom’s investor is Horizon Ventures (a Hong Kong-based venture-capital (VC) firm). It has four subsidiaries in China – Zoom Video Communications (Suzhou) Inc., Saasbee Inc. (Hefei) Ltd., SaasBee Software (Hangzhou) Co.Ltd. and Zoom Video Communications (Shanghai) Co. Ltd. It has a Hong Kong-based subsidiary Zoom Video Communications Hong Kong.
High number of research and product-development personnel at its China-based R&D centre. The annual report filing for fiscal ended January 31, 2020 mentions its CEO Eric S. Yuan is of Chinese origin.
Ambika Khanna, senior researcher of international law studies programme, Gateway House, points out that “users are extensively using Zoom, including for non-public purposes such as board meetings and policy decisions, assuming data to be secure with end-to-end encryption.”
Interestingly, US cloud company Salesforce owns over 2% in the company. Eric Yuan owns around 28 % of the company.
The recent incident of Zoom sharing data with Facebook and its user data on dark-web has also pulled the company’s reputation.
The way forward for Zoom.
Zoom has patched security vulnerabilities by hiring experts from Facebook, Google, and Microsoft. Will this lead to a safer Zoom experience and address meeting-bombings? It’ll be seen in the next few days as the 90-day plan comes to speed in May with stronger privacy standards.
As work from home is set to become a new normal for many of us, addressing privacy issues through data routing and stronger encryption standards is going to be a game changer for Zoom Communications after the threat of Covid-19 recedes and established players like Google and Microsoft take it on.
Synergeny research group points out that Covid-19 fails to dent aggressive growth in cloud spending. Zoom’s recent investment in Oracle’s cloud will reassure paid enterprise clients, tech experts believe. In India, too, Zoom had worked with AWS Cloud infrastructure even though it has its own trusted data centres. Raje points that Zoom will follow the rule of land on data localisation as it intends to be in India for a long haul.
Having no Indian home-grown video-conference tool is bad news for the government’s National Information Centre (NIC) – the country should have had a local video-conference solution by now. Can Zoom make this a strategic advantage? Time is limited — “Saynamaste”, Ministry of Electronics and Information Technology’s response to Zoom is already testing on beta. The enterprise customers are where Zoom’s forte lie and that’s where the money is.
Even as Zoom supports the barrage of newly found ‘free’ online customers, turning them into enterprise customers will be its achievement. Oracle, a leading name in cloud security, will be a shot in its arm for its reputation and profitability interests post Covid-19.
Ramping up Zoom’s policy team in India for government-advocacy efforts under the leadership of Jonathan “Josh” Kallmer, its newly named head of global public policy and government relations, would be Zoom’s top Q2 goals as the country works out a game plan to fight Covid-19.
Social distancing is here, and that should aid Zoom’s growth in India and globally. However, it may become a hyper-competitive market and monetising its expanded user base may be a steep challenge with cloud market leaders Google and Microsoft both aggressively eyeing the VC space.
And these bread-and-butter concerns will be on top of Yuan’s mind once the pandemic is contained.
(Research support by Rochelle Britto)
(Graphics by Mohammad Arshad)
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