At This Point, Zoom Could Use Another PandemicReading Time: 5 minutes
The videoconferencing app is in business trouble., Zoom office, A.I. data, business problems: At this point, the app could use another pandemic.
For a while, Zoom was the most important company in America.
Three years ago, the pandemic had forced offices to come up with extended remote-working arrangements, and Zoom became the indispensable videoconferencing platform of choice for millions of stuck-at-home Americans. This humble enterprise app was suddenly there for everything: work, school, social gatherings, activism, dating, telehealth, government hearings, funerals, sex parties, and pretty much anything else that made up life when everyone was locked indoors. Already a profitable company by the end of 2019, Zoom became a stock trader’s dream after it landed on the NASDAQ in early 2020, growing its customer base by 470 percent, quadrupling its revenue (without paying any income tax, according to one report), and expanding its workforce throughout the year.
Obviously, the virtual party couldn’t last: The November 2020 announcement of a coronavirus vaccine dented Zoom’s high-flying stock value by 20 percent. Since then, as vaccination and reduced transmission allowed American enterprise to adjust back to normalish routines, Zoom has struggled to maintain its pandemic-era success. Its net income, product sales, users, and stock value have all plummeted since 2021.
And how is Zoom’s business faring these days? Take a look at some recent headlines:
• Over the weekend, full-stack developer Alex Ivanovs noted on his Stack Diary platform that Zoom had updated its terms of service, with language assuming automatic user consent for the company’s utilization of ‘Customer Content’ (e.g., transcripts and recordings from users’ everyday video and audio calls) and ‘Service Generated Data’ (users’ behavioral data and engagement metrics) for ‘machine learning, artificial intelligence, training, testing.’ After the discovery was shared on Hacker News, Zoom’s chief product officer wrote responses both on the forum and on the company blog, declaring on Monday that ‘we will not use audio, video, or chat customer content to train our artificial intelligence models without your consent.’ Ivanovs found, however, that the app still doesn’t allow any opt-out option for Service Generated Data collection; Gizmodo further noticed that there’s no easy means to refuse sharing your customer content with the company’s optional, A.I.-powered, chatbot-heavy Zoom IQ. One legal advocate told the Washington Post Tuesday that the murky A.I. policies may violate Zoom’s 2020 settlement with the Federal Trade Commission, which forbid the app from misrepresenting its data-collection rules, among other terms.
• Following the lead of corporations insisting that their remote-working employees re-embrace the office commute, Zoom announced last week that employees who live within 50 miles of a company office—whether in California, Georgia, Kansas, or Colorado—must report to the relevant campus for work at least twice a week. Beyond the irony of a remote-work totem embracing commuter life, this announcement was also a walk-back of Zoom’s previous stance: In January 2022, the company promised to allow up to 98 percent of its workforce to stick to hybrid or remote-working arrangements as preferred. Naturally, as the New York Times reported Monday, Zoom employees were not happy with the new mandate, ‘express[ing] frustration about the time and money they’d waste while commuting.’ One anonymous employee message reported by the San Francisco Standard: ‘The irony is you need to go to office but every meeting is via Zoom.’
• British researchers put out a new paper on Monday noting that Zoom’s audio-suppression tools aren’t strong enough to prevent deep-learning models from being able to detect the text that you type on your Mac’s keyboard, even if that text isn’t transmitted through Zoom—because the models are able to detect which keys you’re pressing just based on their relative sounds. And again, they can detect this even if Zoom muffles a user’s audio.
• By Monday evening, Zoom’s stock value had sunk down to $68.66, a nearly 20 percent drop from its year-to-date peak in early February—and an 88 percent drop from its all-time high of $559, reached in October 2020. Company shares haven’t seen a triple-digit valuation since last August.
Those are rough breaks even before you zoom outward to look at the company’s overall year. On Feb. 7, Zoom announced that it would lay off 1,300 employees, about 15 percent of its global workforce. Later that month, the company reported that it had lost $104 million in the last three months of fiscal year 2022, representing its first quarterly loss since 2018; Zoom recorded only a slight revenue rebound for Q1 in 2023.
Zoom has also gotten an education in PR and the drawbacks of its name being so closely linked to remote work. A March Financial Times report on the collapse of Silicon Valley Bank—of which Zoom was a client—implied that part of the institution’s financial mismanagement stemmed from its dependence on remote work. (A representative expert quote: ‘It is harder to have a challenging call over Zoom. It makes it harder to challenge management.’) Similarly, the same white-collar workspaces that relied on remote work over the pandemic, or came to embrace hybrid flexibility, are now taking aggressive stances against telecommuting thanks to expensive office rents and business-depleted downtowns. Plus, multiple researchers have released studies finding that non-office work drains productivity and that virtual communication is less effective than face-to-face chats. (The productivity claim is somewhat disputed.)
A perfect storm in the age of ‘Zoom fatigue,’ accentuated all the more by the age of A.I. Although the notorious tech has been part of Zoom’s arsenal for years—the company introduced A.I.-powered transcription programs back in 2017—its work in this field has only recently come under more scrutiny and skepticism. Last year, Zoom declared that it would consider incorporating ‘emotion A.I.,’ software with a dubious ability to gather and use data from users’ facial expressions, tone of voice, and conversational language. There was widespread backlash, but that didn’t halt Zoom from seeking other A.I. opportunities: acquiring the customer-service A.I. startup Solvvy, releasing the Zoom IQ for Sales tool in order to gauge ‘sentiment data‘ from calls between salespeople and clients, and partnering with companies like OpenAI and Anthropic to integrate advanced chatbots into Zoom software. These adornments are optional for Zoom users—but once customers do check them out, and are notified that these glamorous tools may mine their daily habits for A.I. training, they’re likely to find that denying consent to use their data is more difficult than it should be. As such, they may then take their business elsewhere: A researcher for the investigative journalism outlet Bellingcat announced Monday that his employer would be canceling its paid Zoom account.
The latest A.I. fracas brings to mind a controversy that (mostly) slipped by much of the public during Zoom’s remote-era honeymoon: its suspect treatment of user data writ large. When Zoom entered more public institutions, it also exposed itself to more investigation. As Josephine Wolff documented for MediaDownloader back in April 2020:
That wasn’t all. Zoom found itself in geopolitical trouble that summer after closing down the account for a group of pro-democracy Chinese activists based in the U.S., reportedly at the behest of the Communist Party. And last year, a security researcher found that Zoom’s auto-update function had multiple vulnerabilities that could open Mac users up to malicious hacks.
The moral of Zoom’s latest dustups may be that boom times can only shield your company from long-bubbling controversies for so long before business-crash realities, audience exhaustion, and heightened suspicion bring you back down to Earth. Zoom may be counting on the cash-flush A.I. boom to raise its prospects again, but now that it’s 1) no longer leading by example on the remote-work trend that it helped to enable, 2) still facing criticism over its security measures, and 3) once again frustrating users with how it handles their data, it will take a lot for Zoom to regain its momentum once again.
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