Zoom, Five9 $15B Deal Comes Under Justice Department Scrutiny

Zoom Video Communications Inc’s ZM deal to buy customer-service software company Five9 Inc FIVN is being investigated by a U.S. Department of Justice-led panel over the former's ties with China, The Wall Street Journal reported on Tuesday, citing a Federal Communications Commission letter. 

What Happened: The interagency panel, known as Team Telecom, is reviewing the deal to see if it poses a risk to U.S. national security or law enforcement interests given Zoom’s China ties.

The justice department has requested the FCC to postpone action on the deal until Team Telecom finishes its review, putting Zoom’s deal for Five9 on hold, the report noted.

See Also: Zoom Aims To Boost Phone Presence Beyond Video As It Strikes $14.7B Deal To Acquire Five9

Why It Matters: Zoom has separately been under federal investigation in New York and California for its interactions with the Chinese government as well as its policies related to storing and protecting data. The videoconferencing company is also known to be facing multiple federal investigations related to its ties with China, WSJ noted. 

Price Action: Zoom shares closed 0.87% lower at $278.24 on Tuesday and were further down 0.59% in the after-hours. Five9 closed 0.83% lower at $170.17 and were further down 0.62% in after-hours trading.

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