May 19, 2020 / 2:52 PM / in 16 days

UPDATE 1-Zoom suspends new free user registrations in China

(Adds analyst comment, shares)

May 19 (Reuters) - Video conferencing provider Zoom Video Communications Inc said on Tuesday it was limiting new user registrations in mainland China to enterprise customers only.

Free users in mainland China can continue to join meetings hosted by registered customers, whereas new user registrations are available only for enterprise customers who sign up through authorized sales representatives, the company said.

The move is targeted at reducing the company's exposure to China with consumers flocking to Zoom, said DA Davidson analyst Rishi Jaluria.

"The China exposure has become a bit of a concern from a media perspective, especially after reports that some data was routed through a server in China," Jaluria said.

Nikkei first reported on the development saying the restriction on Chinese individual accounts on the Zoom app was due to "regulatory requirements" in the country and the company has come under scrutiny from both the United States and China as trade tensions intensified. (s.nikkei.com/2Zfzjh6)

The coronavirus-led lockdowns of millions of people globally have driven huge growth in use of platforms such as Zoom, as families and organizations use its software to connect.

However, Zoom faced a backlash from cyber security experts and users alike over a number of privacy and security issues that caused it to pause new feature development for 90 days.

Shares of the company were up 3% to $169.63 in morning trade. (Reporting by Rebekah Mathew and Neha Malara in Bengaluru; Editing by Shounak Dasgupta and Arun Koyyur)

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