Zoom Video Communication (NASDAQ: ZM) agreed to settle with the Federal Trade Commission (FTC) over its encryption to secure users’ data on its video conferencing platform.
The stock price of the company suffered a steep decline following the announcement of the settlement. ZM shares were down more than 17% to $413.24 each.
Zoom is among the tech companies that benefitted from the ongoing COVID-19 pandemic, which forced many businesses and other entities to allow their employees/staff to work from home and educational institutions to implement virtual learning.
FTC’s allegations against Zoom
The FTC alleged that Zoom engaged in deceptive and unfair privacy and security practices by claiming that its video conferencing platform is integrated with “end-to-end AES 256 bit encryption” because its users’ privacy and security its “highest priority.”
End-to-end encryption is a method of securing communications in which third-parties cannot read or modify data that are transferred from a device/system to another. The data is encrypted on the sender’s device and only the receiver can decrypt it.
