It hit the big time with pandemic-driven remote work, but now Zoom is facing a massive payout after settling a lawsuit claiming it shared personal user data with Facebook, Google and LinkedIn.
Zoom has agreed to a $115 million (US$85 million) payout and may also have to pay up to $28.78 million (US$21.25 million) for legal fees the plaintiffs' lawyers are seeking.
A US District Court in California has filed a preliminary settlement in the class action, with participants getting a 15% refund on their subscription or $33 (US$25), whichever is the larger, and others potentially receiving $20 (US$15).
As part of the settlement, the online videoconferencing platform must also strengthen its security and comes after hackers were able to infiltrate private meetings, attacks known as ‘Zoom bombing’.
The company reportedly collected $1.7 billion (US$1.3 billion) in Zoom Meetings subscriptions from class members.
Zoom has enjoyed a huge rise in user numbers and revenue thanks to the global pandemic, which has seen everyone from CEOs to school students and millions of workers relying on Zoom to carry on their meetings, classes and catchups.
While it agreed to settle, Zoom denies the privacy claims.
In a statement, the company said: “the privacy and security of our users are top priorities for Zoom, and we take seriously the trust our users place in us”.
It comes after the judge had earlier in the year struck out significant sections of the class action relating to privacy and negligence, and violations of California consumer law.
The judge said the plaintiffs couldn’t prove Zoom shared or sold personal information, but most likely disclosed other people's data, not necessarily the plaintiffs' data.
The contract-based claims were able to proceed and led to this payout.
Zoom was fortunate that Zoom bombing didn’t feature more significantly in the penalties because when ruling out elements of the class action, the judge declared the US Communications Decency Act largely protected it from being responsible for offensive, pornographic or otherwise inappropriate material displayed in these attacks.
Huge spike in customers and revenues Zoom’s share price has more than tripled since the pandemic shuttered offices and drove people to work from home en masse.
It saw a rapid uptake of users, overwhelming the service at first and forcing it to boost encryption and embark on a program of improvements to security and privacy in 2020.
At the end of the first quarter of the US 2022 fiscal year, Zoom reported all customer number were up, with almost half a million customers with more than 10 employees, up approximately 87% from the same quarter last fiscal year.
At the top end it has 1,999 customers that contribute more than $100,000 in trailing 12-month revenue, up approximately 160% from the same quarter last fiscal year.
The online videoconferencing platform recently announced first quarter revenue of $1.29 billion (US$956.2 million), up a staggering 191% on the previous period last year.
The public company, which is worth $197 million (US$145.5 million), even raised its expected earnings range from $5.391 billion (US$3.975 billion) to $5.404 billion (US$3.990 billion) for the full fiscal year.
The class action, brought by a group of 28 people and lists Facebook and LinkedIn as well as Zoom as defendants, was initiated in 2020.
The settlement must be approved by a US District judge.