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Zoom Bars Individuals in China From Signing up for Free Accounts

By Donna Fuscaldo – May 19, 2020 at 4:03PM

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Zoom is only letting enterprises open accounts in China granted they can prove they are a real business with a corporate banking account.

Zoom Video Communications (ZM -1.18%) is barring individuals in China from signing up for a free account. 

The video chat platform made popular thanks to the COVID-19 pandemic, began blocking new free users in China from hosting meetings at the start of May, reported the Nikkei Asian Review.

A woman having a Zoom meeting in an empty office.

IMAGE SOURCE: GETTY IMAGES.

Zoom is only enabling enterprises to sign up for an account if they can prove they are a real business and show they have a corporate banking account. The move is reportedly due to regulations in China, noted the report. Free users can join a Zoom meeting in China, but only if it is hosted by an enterprise paying customer. 

Ever since the pandemic started and shelter-in-place orders were established, millions of people around the world have flocked to Zoom to stay in touch, engage in distance learning, and collaborate. But that quickly led to security issues, with people complaining about hackers infiltrating meetings. School systems, government agencies, and some companies banned the use of Zoom for official business, prompting the tech stock to institute a 90-day security plan. It has since beefed up the security, brought on experts to consult, and made its first acquisition to provide end-to-end encryption on its platform. 

Meanwhile, Reuters reported that the move to limit free users in China has more to do with Zoom reducing its exposure to the country, given intensifying tensions between Beijing and the White House. The videoconferencing app company did come under fire earlier this spring after researchers at the University of Toronto found that Zoom data was sent through servers residing in China, even though the users weren't located there. Zoom fixed that by enabling paid customers to opt-in or opt-out of specific data center regions.  Zoom CEO Eric Yuan addressed the China concerns in a blog post earlier in May, saying that outside of that incident, the company has seen "disheartening rumors and misinformation cropping up." 

Donna Fuscaldo has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Zoom Video Communications and recommends the following options: short August 2020 $130 calls on Zoom Video Communications. The Motley Fool has a disclosure policy.

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