Zoom will suspend direct sales in mainland China and only sell through partners, amid scrutiny over its ties to the country (ZM)

  • Zoom is halting direct sales of its video conferencing products in mainland China and will only sell there through third party partners. 
  • This move comes as Zoom relationship with China has been questioned by lawmakers and users over the last few months, though Zoom doesn’t cite that as the reason for the change. 
  • The change will take effect on August 23, and users in mainland China will still be able to join Zoom meetings as participants, a company spokesperson told Business Insider. 
  • In recent months, Zoom mistakenly routed user data through China and shut down activist accounts at the request of the Chinese government, leading to increased scrutiny over its ties to the country. 
  • Visit Business Insider’s homepage for more stories.

Zoom will halt direct sales of its video conferencing products in mainland China, and will instead only offer its technology through a few third party partners, the company announced on its website in China on Monday. 

The move comes as Zoom’s surge in popularity has led to scrutiny of its ties to China, though Zoom doesn’t cite any reason for the change. 

Zoom’s online video conferencing technology will now be embedded in services from partners like Bizconf Communications, Suirui Zhumu Video Conference, and Systec Umeet, and no longer sold as a standalone product, though users in mainland China will still be able to join regular Zoom meetings as participants. The change will take effect on August 23, a Zoom spokesperson told Business Insider. CNBC first reported the change.

“Our go-to-market model in Mainland China has included direct sales, online subscription, and sales through partners. We are now shifting to a partner-only model with Zoom technology embedded in partner offerings, which will provide better local support to users in Mainland China,” Zoom said in a statement.

This move follows changes Zoom made in May to suspend new free user registrations in Mainland China and only allow corporate customers to sign up for Zoom accounts.

Zoom is a US-based company, headquartered and founded in San Jose, California, and its CEO Eric Yuan is a US citizen who immigrated from China in the 1990s. However, a large portion of its development team is based in China, according to a company regulatory filing from March. 

A few incidents this year have put the company under scrutiny from lawmakers and users for its ties to China. In April, the company admitted that it mistakenly routed some meetings through data servers in China. Zoom then added a feature to give paid Zoom users control over which data centers are used to route their calls, and free users outside of China would no longer never have their calls routed through the country.

Then, in June, Zoom shut down the account of activists who hosted events commemorating the 31st anniversary of the Tiananmen Square protests at the request of the Chinese government.In a subsequent blog post, Zoom said it had shut down the host’s accounts and meetings because it did not have the capability to block users individually by country and in the future would “not allow requests from the Chinese government to impact anyone outside of mainland China. 

Recently, Senators Josh Hawley (R-Mo.) and Richard Blumenthal (D-Conn.) sent a letter to the Department of Justice asking it to investigate Zoom and TikTok, citing concerns over potential security threats from ties to the Chinese government. 

Zoom’s move comes as TikTok is under scrutiny in the US because it is owned by Chinese company Bytedance. Lawmakers have accused the app of sending American user data to China, and though TikTok has denied those allegations, the Trump administration has threatened to ban the app unless it is sold to a US company. Microsoft has expressed interest in buying it.

While Zoom distances itself from China, it is expanding its presence in India. The company plans to open a technology center in Bangalore, and is recruiting DevOps engineers, and IT, Security, and Business Operations personnel in India, according to a late July blog post. It already has offices and data centers in Mumbai and Hyderabad. 

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