Zoom Shares Drop As New York Attorney General Looks Into Company's Privacy, Security Practices

The shares of Zoom Video Communications ZM dropped 6.14% lower at Monday's close compared to the day's open at $160.76.

What Happened

The drop came as the New York Times reported that the office of the New York Attorney General is probing the company's data privacy and security practices.

In a letter to Zoom, the AG's office asked the telecommunications company what security measures it has taken in light of the increased traffic on its network, according to the Times.

The office particularly expressed concerns around the company's policies around securing the privacy of primary and secondary school children, who are using its apps due to the lockdown imposed by the pandemic, the Times noted.

Citing a report by Motherboard last week that said that Zoom shared customer data with Facebook Inc. FB without explicit consent, James' office asked for "the categories of data that Zoom collects, as well as the purposes and entities to whom Zoom provides consumer data."

Zoom later removed the code that sent the data to Facebook after Motherboard's report.

"We appreciate the New York attorney general's engagement on these issues and are happy to provide her with the requested information," Zoom said in a statement.

The company has seen a surge in usage as widespread lockdowns across the world have forced people to communicate remotely for work, education, and other needs. Its shares are up 121.78% year-till-date, even as the wider Nasdaq composite index is down 13.36%.

Price Action

Zoom's shares closed 0.54% lower at $150.88 on Monday. The shares traded 0.74% higher at $152 in the after-hours market.