One of the biggest success stories of the pandemic has been Zoom. Yeah, it’s weird to hear that there were successful things going on during such hard times, but one man’s suffering is another one’s success. Zoom is a video conferencing platform that was used by many businesses and schools when the world went virtual during COVID lockdowns, and the company grew exponentially through that time. Even with all this success, regulators are onto Zoom for a specific acquisition they made recently.
Zoom bought telecom company Five9 for 15 billion dollars a couple of months ago, and that deal is now under scrutiny due to Zoom’s links with China. Justice Department Committee Team Telecom is now reviewing a licensing application from Zoom to see if it has any national security risks, and you might be wondering how this is harmful in any way? The US doesn’t want China to have any links to their telecom infrastructure as China could pose a major threat, and considering that Five9 deals with telecom, this deal looks very weird now. One analyst believes that Five9’s shareholders will reject the deal, but their predictions look very mixed now. The Justice Department has constantly been uncovering Zoom’s links to China in the last few months, from their CEO to an incident regarding a Tiananmen Square Protest Memorial where a Zoom employee tried to disrupt the videoconference commemorations. This leaves a very big company in a sticky situation that will have an impact on their share price. What do you think about this deal?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.