By Maria Ponnezhath and Shubham Kalia
(Reuters) – Zoom Video Communications Inc faced a class action lawsuit by one of its shareholders on Tuesday, which accuses the videoconferencing application of exaggerating its privacy standards and of not disclosing that its service was not encrypted from end to end. tip.
Shareholder Michael Drieu claimed in a lawsuit that a series of recent media reports highlighting privacy flaws in the Zoom app caused the company's stock, which had recovered for several days earlier this year, to plummet.
The shares closed down 7.5% to $ 113.75 on Tuesday. They have lost almost a third of their market value since reaching record highs in late March.
Zoom's chief executive, Eric Yuan, apologized to users last week, saying the company had fallen short of expectations regarding the privacy and security of the community and was taking steps to correct the problems.
Zoom is trying to solve security problems as it registers millions of new users worldwide, as people are forced to work from home after blockages have been imposed to slow the spread of the coronavirus.
However, the company is facing a reaction from users concerned about the lack of end-to-end encryption of meeting sessions and "zoombombing", where unwanted guests enter meetings.
Spaceon, Elon Musk's rocket company, recently banned its employees from using Zoom, citing "significant privacy and security concerns," while the Taiwanese office told government agencies to stop using the app.
Zoom did not respond to a Reuters request for comment after business hours.
(Reporting by Maria Ponnezhath and Shubham Kalia in Bengaluru)