Zoom’s Acquisition of Cloud Contact Center Software Firm Five9 Under Fire for Security Reasons

Tajammul Pangarkar
Tajammul Pangarkar

Updated · Oct 6, 2021

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Zoom’s USD 14.7 billion acquisition of cloud contact center software firm Five9 is currently under investigation by a federal commission for reasons related to national security. The Federal Communications Commission was requested in a letter dated August 27 to submit the matter to the Committee for the Assessment of Foreign Participation in the US Telecommunications Service Industry. The committee is chaired by former US Attorney General Merrick Garland. As of July, Zoom had acquired Five9 for over USD 1 billion. With Five9’s technology, Zoom is now looking to expand into other areas. Zoom’s worth increased dramatically during the global pandemic.

Founded by Chinese-American Eric Yuan in San Jose, California, Zoom is headquartered in the United States. It has a large R&D center in China, and House Speaker Nancy Pelosi of California called Zoom “a Chinese corporation” last year during an MSNBC appearance. “The USDOJ thinks that such threats may be raised by the software’s overseas investments, and the Committee’s review is essential to analyze and make effective suggestions as to how the Commission should pass a ruling on this application,” Justice Department’s David Plotinsky stated in his message to the FCC.

A Zoom spokesman told CNBC in an email that the firm anticipates the deal to conclude in the first quarter of 2022. A representative from Five9 declined to provide more information. An earlier version of this story appeared in the Wall Street Journal on Tuesday, the 21st of Sept, 2021. Former President Donald Trump signed an executive order in 2020 to formalize the committee that delivered the letter. In the past, the committee was referred to as Team Telecom, and it advises the FCC on risks to telecom networks. It’s not the same as the Committee on Foreign Investment in the United States (CFIUS), which has prevented Chinese firms from acquiring American ones.

Zoom stated in its most recent financial report, released in August, that its Russian operations, run by Five9, pose a danger to the company. Managing Five9’s overseas operations, including technical personnel and Russian operations, poses regulatory, financial, and diplomatic risks as well as extra complexities if relations between Russia and the United States deteriorate materially, or if either Russia or the United States enforces or implements increased financial sanctions, supply-chain limitations, or other barriers to conducting business. Zoom’s executives estimate revenues to increase by 31% in the current quarter.

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Tajammul Pangarkar

Tajammul Pangarkar

Tajammul Pangarkar is a tech blogger that frequently contributes to numerous industry-specific magazines and forums. Tajammul longstanding experience in the fields of mobile technology and industry research is often reflected in his insightful body of work. His interest lies in understanding tech trends, dissecting mobile applications, and in raising a general awareness of technical know-how. When he’s not ruminating about various happenings in the tech world, he can be usually found indulging in his next favorite interest - table tennis.