Zoom has made a $14.7 billion deal for call center company Five9 that has drawn the scrutiny of federal agencies concerned the transaction could pose a threat to national security.
Five9 carries domestic and overseas networks. Without providing details, the Justice Department in a filing with the Federal Communications Commission (FCC) has indicated that the deal could pose a national security threat due to the foreign ties and ownership connected to the deal, the Economic Times reported. A Zoom spokesperson told The Hill the deal is subject to regulatory approvals.
“We have made filings with the various applicable regulatory agencies, and these approval processes are proceeding as expected,” the spokesperson said in a statement provided to The Hill.
Zoom, a videoconferencing company headquartered in San Jose, Calif., has been under scrutiny for its ties to China. Its CEO, Eric Yuan, was born in China but became a naturalized US citizen more than a decade ago, according to the Associated Press. Whether the concerns will torpedo its deal remain to be seen, though officials remain optimistic.
"We continue to anticipate receiving the required regulatory approvals to close the transaction in the first half of 2022,” the spokesperson told The Hill.
The company came under fire when it blocked an online commemoration of the 1989 Tiananmen Square protest that was organized by an activist based in the US. The New York Times reported that Zoom eliminated three meetings and accounts tied to them after officials in China asked that they be banned from the platform.
“We strive to limit actions taken to only those necessary to comply with local laws,” Zoom said in a statement at the time,” Zoom told The New York Times. “Our response should not have impacted users outside of mainland China.”
The Justice Department has not elaborated on which foreign ties created the most worry, according to the Associated Press.
In its filing with the FCC, the Justice Department urged the commission to delay any action on Zoom’s deal to acquire Five9 until a review is finished by Team Telecom, The Hill reported, citing the Wall Street Journal.
The move has put Zoom’s acquisition of Five9 on hold, pending the review, according to The Hill.