Video conferencing giant Zoom and cloud contact software company Five9 have announced they are abandoning a $14.7 billion deal, which was first announced in July. The deal aimed to help Zoom transition its business for the hybrid future of working by moving into the contact cloud sector.
This Comes as Five9 Failed to Get Sufficient Shareholder Support for the Merger.
He continued in a statement: “The contact center market remains a strategic priority for Zoom, and we are confident in our ability to capture its growth potential.
“At Zoomtopia, we announced the Zoom Video Engagement Center, our cloud-based contact center solution, which will launch in early 2022. Video Engagement Center will be a flexible, easy-to-use solution that connects businesses and their customers.
“We are building this new solution with the same scalability and trusted architecture that has made Zoom the platform of choice for businesses around the world.
“We also plan to maintain our valued existing contact center partnerships with companies like Five9, Genesys, NICE inContact, Talkdesk, and Twilio.”
DOJ Investigates the Merger
The decision to abandon the merger also comes hot on the heels of the US Department of Justice (DOJ) dialing up its scrutiny and investigation of Zoom’s first multi-billion acquisition for national security reasons.
The DOJ tasked its committee for the Assessment of Foreign Participation in the United States Telecommunications Service Sector with scrutinizing the deal “to determine whether this application poses a risk to the national security or law enforcement interest of the United States”.
There was particular concern over alleged “foreign participation” and influence over the deal as Zoom has a presence in China, while Five9 has operations in Russia.
Zoom’s Early Years
Eric Yuan, a former Cisco Webex VP, created the company. In April of 2011, he and forty engineers left Cisco to create a new firm that was at first called Saasbee, Inc. Due to the belief that the videotelephony market was already crowded, the company had problems attracting investors.
WebEx co-creator Subrah Iyar, former Cisco SVP and General Counsel Dan Scheinman, and investors Matt Ocko, TSVC, and Bill Tai contributed $3 million to the company’s seed round in June 2011.
The International Association for Constitutional Law hosted the first “round-the-clock and round-the-globe” event across time zones on July 3-4 using Zoom Webinar, with 52 speakers representing 28 countries.
Soon after, it became regular practise to hold multi-day seminars that “essentially travel the globe with the sun from East to West.”
Zoom purchased Kites (Karlsruhe Information Technology Solutions) in June 2021, a language translation company using AI, with the goal of lowering language barriers during video calls. Zoom’s offer to acquire Five9, a provider of contact centre services, in September 2021 for $14.7 billion was rejected by Five9’s shareholders.
Some Facts of Zoom
- Zoom, created by entrepreneur Eric Yuan and released to the public in April 2019, saw its popularity soar amid the recent coronavirus epidemic.
- The video conferencing startup WebEx, which he managed, was acquired by Cisco in 2007.
- After eight failed attempts to secure a visa, Yuan, a Chinese native, finally made his way to Silicon Valley in 1997.
- Prior to the start of trade, Yuan held 22% of Zoom, which was worth just over $9 billion at the IPO.
- Yuan is a huge Golden State Warriors and Golden State Warriors player Andre Iguodala investor basketball enthusiast who regularly attends his kids’ games.