US Authorities Investigate Zoom's $15 Billion Acquisition Deal... Potential Security Threat

Zoom's Acquisition of Five9: Review of China-Related Risks

[Asia Economy International Department Reporter] The Wall Street Journal (WSJ) reported on the 21st (local time) that the U.S. Biden administration is investigating the acquisition deal of the video conferencing company 'Zoom Video Communications' (hereafter Zoom).

[Image source=Yonhap News]

According to WSJ, an interagency committee led by the U.S. Department of Justice is reviewing Zoom's deal to acquire 'Five9,' a cloud-based call center operator and customer service software company.

Known as the 'Team Telecom' committee, it is investigating whether Zoom's $15 billion contract to purchase Five9 shares and its ties to China could pose potential national security risks.

According to documents submitted by the Department of Justice to the Federal Communications Commission (FCC) last month, the investigation aims to determine whether the deal poses risks to U.S. national security or law enforcement interests.

The Department of Justice requested the FCC to delay action on Zoom's authorization application until the review is complete, citing potential risks related to foreign relations and ownership, thereby putting the Five9 deal on hold.

WSJ reported, "The U.S. government is intensifying its scrutiny of Zoom's relationship with China," noting that Zoom faces multiple federal investigations related to its dealings with China.

In December last year, U.S. prosecutors indicted a Zoom executive on charges of disrupting a video forum commemorating the Chinese 'Tiananmen Democracy Protests.' Zoom, which grew rapidly after the COVID-19 pandemic, has faced negative attention due to suspicions of ties to China.

Zoom has servers in China, and a significant portion of its research and development is conducted there. Its founder and CEO, Eric Yuan, is originally from Shandong Province, China.

Regarding the suspicions of ties, the company has repeatedly emphasized that Eric Yuan is a U.S. citizen, WSJ reported. WSJ described this China-focused investigation as "the latest example of U.S. officials' vigilance," noting that the FCC and regulatory authorities have accelerated efforts in recent years to eliminate Chinese connections in telecommunications infrastructure.