Zoom to shift to 'partner-only' model in China, suspend direct sales

August 3, 2020 5:09 AM EDT

FILE PHOTO: Small toy figures are seen in front of diplayed Zoom logo in this illustration taken March 19, 2020. REUTERS/Dado Ruvic/Illustration

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SHANGHAI (Reuters) - Zoom Video Communications (NASDAQ: ZM) will shift to a partner-only model in mainland China from Aug. 23, suspending direct sales to all customers in the region, the company said on Monday.

Zoom customers in China received an email on Monday informing them of the change, and telling them it would provide users with "better local support."

In the email, seen by Reuters, Zoom listed Bizconf Communications, Suiri Zhumu Video Conference, and Systec Umeet - as partners that can offer its commercial service to customers in China.

Zoom has been distancing itself from its China operations, which had come under the scrutiny of human rights activists and privacy advocates.

The company announced in May that it would suspend new free user registrations in China and limit new user registrations to enterprise customers who sign up through authorized sales representatives.

But in June, Zoom came under fire when it was revealed it had shut an account belonging to a group of U.S.-based Chinese activists who were attending an online video group chat to memorialize the Tiananmen Square massacre.

In a blog post, Zoom confirmed it had temporarily shut down the accounts due to request from China's government. It said that it had re-instated the terminated accounts and "will have a new process for handling similar situations."

Months earlier, security researchers discovered that Zoom re-routed some calls through its servers in China, even if those calls were placed outside China.

The company said that the re-routing took place in "extremely lmited circumstances" and that it took its mainland China data centers off of an approved list of backups for users outside of China.

(Reporting by Josh Horwitz and Brenda Goh in Shanghai, editing by Simon Cameron-Moore)

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Corporate News, Reuters