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ZOOM VIDEO COMMUNICATIONS: FLASH IN THE PANDEMIC OR ENDURING SUCCESS?1

Malay Krishna and Gursimran Gambhir wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveycases.com. Our goal is to publish materials of the highest quality; submit any errata to [email protected]. i1v2e5y5pubs Copyright © 2021, Ivey Business School Foundation Version: 2022-02-09

I think a hybrid, I think that’s a future, and I think [at] almost every organization

[they’ve] got to embrace that—give employees flexibility.

– Eric Yuan, chief executive officer, Zoom Video Communications Inc., on the future of work2

By December 2020, the world had been in the grips of the coronavirus pandemic for almost a year. The

world adapted to social distancing and working from home—measures advocated to minimize the spread

of COVID-19— with the help of technology such as Zoom, an online video conferencing app developed

and maintained by Zoom Video Communications Inc. (Zoom), based out of San Jose, California. A measure

of Zoom’s success was that it was the most downloaded app in the United States and internationally, ahead

of apps such as TikTok (a video sharing, social media platform) and Among Us (a video game).3

Zoom’s stock price had soared (see Exhibit 1), but many doubted the company’s long-term growth prospects.

Some believed that it was just a matter of time before large rivals such as Webex by Cisco Systems Inc.

(Cisco), Google Meet by Google LLC (Google), and Microsoft Teams by Microsoft Corporation caught up

with Zoom’s industry leading product features.4 To counter the competition, Zoom needed to continuously

upgrade its products. Skeptics also pointed out that Zoom’s primary driver of growth—social distancing due

to the pandemic—would diminish as vaccines and therapies for COVID-19 became available in 2021. But

some analysts suggested that some of the shift to remote work and online meetings would be permanent.5 If

so, a partial return to in-person meetings was likely. How could Zoom best adapt to this anticipated post-

pandemic world of hybrid meetings? Did the company have other options for growth?

EVOLUTION OF THE VIDEOCONFERENCING INDUSTRY

The term “video conferencing” emerged in 1967, a little after AT&T Inc. introduced “picture phones,” an

expensive curiosity, in 1964.6 In 1982, Compression Labs Inc. launched the first commercial group video

conferencing system, but adoption was limited: the bulky equipment required an upfront investment of

US$250,0007 and calling rates were $1,000 per hour.8

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A surge in the popularity of video calling occurred after 1995, driven by the increasing and widespread

adoption of the Internet, advent of more capable personal computers, and instant messaging software from

Yahoo! Inc., America Online Inc. (AOL), Apple Inc., and Microsoft. By 2003, all major instant messaging

providers offered a video calling service.9 Usually, the service was offered in two formats: free, supported

by advertising; or as an ad-free, paid service targeted at professionals and business customers.10 By 2006,

Skype (developed by Skype Communications S.à.r.l.) had 100 million registered users, making it the largest

video calling platform in the world.11 The advent of smart phones, and in particular Apple’s FaceTime app

in 2010, saw another surge in adoption of video calls and messaging.

One substitute for Internet-based video conferencing was videoconferencing using integrated services

digital network (ISDN) technology—dedicated telephone circuits that were optimized for two-way

simultaneous transmission of audio, video, and text. ISDN was adopted by broadcaster media, but it failed

to achieve widespread business and consumer adoption because broadband Internet became cheaper and

more widely adopted.12 Some video conference service providers, such as Polycom Inc. (founded in 1990;

the products were later branded as Poly when the company joined Plantronics Inc.), focused on hardware-

centric solutions for customers.13 However, most providers, such as Webex (founded in 1996), Skype

(founded in 2003), Lifesize Inc. (founded in 2003), and GoToMeeting (developed in 2004 and later acquired

by LogMeIn Inc.), focused on software applications, which could be used on a variety of personal

computers and smartphones.14

In 2019, the global video conferencing industry was estimated to be worth $3.85 billion in annual revenues,

with growth projections of 10–14 per cent annually.15

Customers and Consumers

Users of videoconferencing services could be segmented into individual consumers and business users. For

individual consumers in the United States, Apple’s FaceTime app, with an estimated 45 per cent market

share, was the most popular way to “video-chat” for personal use.16 Bundled with Apple devices, FaceTime

was free to use but proprietary to Apple’s Internet-enabled devices; hence, FaceTime could not be used

across platforms. Other popular consumer apps included Zoom Meetings, Google Hangouts, and Skype, all

of which could be used across platforms.

Business customers were the biggest driver of revenues for the videoconferencing industry in 2019.17

Businesses had adopted video conferencing as a way of reducing travel expenses while connecting with

suppliers, customers, and others.18 Business requirements for videoconferencing included the ability to set

up meetings easily, in advance, and to connect to a meeting from different devices and operating systems.19

Challenges for business users included unsatisfactory audio and video quality, a tedious meeting setup

process, and difficulty accessing in-meeting documents; business users needed responsiveness from

customer support, an interface that did not tax the business’s bandwidth requirements and that was

compatible with corporate firewalls,20 and pricing complexity and affordability.21 Business buyers were

influenced by expert opinions from research firms such as Gartner Inc. and Forrester Research Inc. and user

reviews at websites such as Trust Radius, G2 (formerly G2 Crowd), and IT Central Station.22

YUAN AND ZOOM

Born and raised in China, Yuan began thinking about video conferencing during his freshman year of college,

then considering it as an alternative to travelling 10 hours to meet his girlfriend.23 In 1997, shortly after his

arrival in the United States, Yuan joined Webex as a software engineer, one of the first 12 employees.24

In 2007, Webex was acquired by Cisco, and Yuan was appointed vice-president of engineering.25 But in

2011, irreconcilable differences came to a head: Yuan had a vision of developing an easier-to-use, cross-

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platform video conferencing app for businesses while Cisco wanted Webex to emphasize aspects of social

networking, emulating the likes of Facebook.26 Yuan left his job and several co-workers followed him out

of Webex and into Zoom, the new venture Yuan founded.27

Yuan revealed that the early days of Zoom were heavily focused on product development.28 For the first

three years, most of Zoom’s workforce consisted of software engineers who focused on enhancing Zoom’s

video conferencing platform.29 The developers deliberately avoided the strategy of reusing existing, open-

source software. Instead, Zoom chose the long and arduous, build-from-scratch journey because the

developers wanted to “do it right.”30

Zoom also delayed hiring a product manager until 2016, compelling the engineers to directly interact with

customers. Yuan claimed this resulted in product development that was more responsive to customer needs

and challenges.31 Yuan himself was deeply attentive to customer needs and was known to personally

respond to user complaints.32

In 2019, Zoom reported 300 improvements to the Zoom platform and a Net Promoter Score (a customer

loyalty metric) of 70, compared to an average score of 58 for the software/technology sector.33 In the words

of one Silicon Valley power user, “Previous to Zoom, I felt like the debate around videoconference apps

was ‘Which do you feel is least terrible? Let’s use that one.’ . . . Zoom had an intersection of stable, high-

quality performance plus ease-of-use, and the network effect started snowballing from there.” 34

Even though Zoom was popular among individual consumers, its target customer segment was

organizations with more than 10 employees.35

In April 2019, Zoom invested in integrating its software solution with complementary hardware devices.

This included collaboration with Internet-enabled telephone device makers Poly and the Neat Company

Inc. (Neat) with the idea of making it easy to integrate a video call with a regular telephone call.36

Zoom’s marketing efforts in the United States included billboard advertising and providing technology to

a basketball team in return for branding inside the arena during the games.37 Zoom recorded revenues of

$151.5 million in 2018 and floated an initial public offering (IPO) in April 2019.38 By December 2019,

Zoom’s market capitalization was $18.8 billion, up 18 per cent since its IPO.39

THE COVID PANDEMIC AND ZOOM

As the pandemic continued through 2020, businesses realized that remote working could be a sustainable,

new way of working. Tata Consulting Services Ltd., a global information technology (IT) major, declared

that by 2025 as much as 75 per cent of its 597,500 employee base would permanently work from home.40

Hayden Brown, the chief executive officer (CEO) of Upwork Inc., a global freelancing platform, said in a

tweet, “Building on our 20 years of experience as a remote work company, we are now permanently

embracing a ‘remote-first’ model.”41 In May 2020, the CEO of Shopify Inc., a Canadian multinational e-

commerce company, said in a tweet, “As of today, Shopify is a digital by default company. We will keep

our offices closed until 2021 so that we can rework them for this new reality. And after that, most will

permanently work remotely. Office centricity is over.”42

Customer Acquisition and Retention

As use of videoconferencing grew, many businesses chose Zoom as their provider. While pricing data

indicated that Zoom’s prices were often higher than competitors’ (see Exhibit 2), customer reviews and

feature listings suggested an edge in product functionality and service quality (see Exhibits 3 and 4). Typical

competitive advantages for Zoom included the ease of a quick download and a few clicks to start a meeting

from anywhere, be it home, office, or on the go; a simplified interface for creating and attending webinars;

cost-effectiveness; higher reliability even during slow Internet connections; and better security.43

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Ironically, security and reliability were perceived as vulnerabilities for Zoom in the early part of the

pandemic. In April 2020, Zoom was sued for sharing its user data with third parties without the consent of

its users.44 Another issue was the phenomenon of “Zoom-bombing,” in which uninvited guests trespassed

on scheduled meetings. As a result, several organizations, both businesses and schools, boycotted Zoom.45

Yuan went on record to say, “We recognize that we have fallen short of the community’s—and our own—

privacy and security expectations. . . . For that, I am deeply sorry.”46

Zoom doubled down on privacy and security issues, releasing several related enhancements. For example,

changes to the app meant that all meeting participants were placed in a virtual waiting room by default, thus

enabling meeting hosts to vet each participant before allowing them to join. Zoom also acquired Keybase

Inc., an encrypted messaging company, and announced that it would offer end-to-end encryption as an

option to all users.47 Zoom also partnered with CrowdStrike Inc., a provider of network security services.48

Another issue that was impacting customer experience was service outages, which were becoming increasingly

frequent. A major incident in August 2020 brought all meetings to a halt in the United States and Europe.49

Despite these setbacks, Zoom downloads from the Google Play and Apple App stores combined broke the

record for worldwide app downloads with more than 300 million downloads over the second quarter of 2020.50

Customer Segments

Zoom’s growth was consistent across customer segments. In October, the number of corporate customers

with more than $100,000 in annualized revenue had grown 136 per cent, the number of business customers

with more than 10 employees had grown 485 per cent, while the number of customers with 10 or fewer

employees had grown more than 700 per cent year-on-year.51 While smaller organizations and individuals

preferred a monthly subscription and were more likely to churn, Zoom had made progress in converting

these customers to annual plans.52

In addition to those broad segments, Zoom offered special features and pricing to educational institutions

and health care providers. In March 2020, Zoom lifted its duration limit of 40-minutes for free service for

schools across the world. The company partnered with Clever, a widely used, single sign-on portal in US

schools, to make Zoom accessible to the 8,000 Clever districts that were experiencing school closures.53 To

complement learning at home, Zoom also rolled out resources to Khan Academy, California State Parks’

PORTS program,54 and others. Logitech International SA, a Zoom hardware partner, provided free

equipment bundles for certain US public schools, and Zoom sponsored blogs for educators to raise

awareness of safety features such as Zoom’s Waiting Room.55 The education segment especially valued

Zoom’s ability to accommodate large numbers of students, provide breakout rooms and in-app polls, and

function with lower bandwidth requirements.56

The health care segment valued Zoom’s compliance with US health care information and privacy

regulations, such as those contained in the Health Information Portability and Accountability Act (HIPAA)

and the Personal Information Protection and Electronic Documents Act (PIPEDA).57 By June 2020, Zoom

topped the list of most-mentioned telemedicine technologies, as rated by doctors.58 The president of one

health care organization outlined four reasons for preferring Zoom: (1) compliance with HIPAA—the

president’s “number one” reason; (2) ease of use—“the patients just get it,” negating the need for the health

care provider to hire its own technology support team; (3) superior affordability; and (4) the ability to

involve multiple participants in one session (for group therapy).59

Apart from businesses and other organizations, Zoom was also used by individuals for socializing during

the pandemic. Many people gathered on Zoom to celebrate birthdays, happy hours, and even weddings. For

these users, Zoom was attractive because of the free, basic, unlimited meeting time for two people (40-

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minute meeting time for groups of 3 or more) and the ability to upgrade to longer group meetings, social

media streaming, and cloud recording of Zoom meetings for a small monthly fee. Zoom’s add-on services,

such as large meetings and audio conferencing, made it easy for users to purchase higher-end features.60

Product Features and Product Line

In November 2020, Zoom had four main products: Zoom Meetings, Zoom Video Webinar, Zoom Phone,

and Zoom Rooms. Zoom Meetings was the most popular product in 2020 and was even considered

synonymous with Zoom.61 Zoom Phone was an Internet telephony solution for adding conventional

telephone calls to Zoom calls. Zoom Rooms was a hardware and software solution that enabled people

gathered in a physical meeting room to participate in Zoom meetings.

During 2020, Zoom introduced several new features to its Meetings product, including the ability for users

to “pin” a video no matter who was speaking, throw a “spotlight” on a video, touch up one’s online

appearance, increase background light, reduce background noise, and add video filters and reactions (non-

verbal responses).62 Zoom also introduced the ability for meeting participants to select and move between

breakout rooms. For arts and music classes, “professional-grade sound” was promised.63 Zoom version 5.0,

released in April 2020, enhanced security in the form of a higher, 256-bit encryption support, and extended

abilities for meeting hosts to report and remove any user who had misused the platform.64 Enhancements

in September 2020 included a new gallery view (in which participant videos could be rearranged), keyboard

shortcuts, and closed captioning.65

To broaden access, Zoom collaborated with popular email software products—Microsoft Outlook and IBM

Notes—to embed plugins for starting or scheduling a Zoom meeting with one click.66 Zoom also signed

agreements with communication device manufacturers such as DTEN Inc., Poly, and Neat so that Zoom

could be used over those devices.67 Collaboration with AVer Information Inc. (a wireless presentation

technology manufacturer) resulted in the launch of a conferencing touch panel—a video screen with touch

screen controls that allowed videoconferencing independent of a computer.68 Later in 2020, Zoom was

expected to expand to several new devices such as Amazon.com Inc.’s Echo Show,69 Facebook Inc.’s

Portal,70 and Google’s Nest Hub Max.71 Partnership with Slack Technologies Inc. made it possible to start

or join a Zoom meeting directly from the Slack business communication platform.72

Zoom Operations

Designed as a cloud-based service, Zoom Meetings could distribute spikes in demand across Zoom’s network

of data centres. However, by August, Zoom had experienced several service outages. In addition, between

January and August 2020, its users of free services had increased 65-fold while its paid users only tripled.73

In an effort to build service capacity, Zoom continued to open new data centres. In August, it opened its

18th data centre in Singapore. 74 This was in addition to its data centres located around the world in places

such as Amsterdam, Frankfurt, Hong Kong, New York, and Melbourne.75 Zoom also partnered with US-

based Oracle Cloud Infrastructure to scale Zoom’s cloud services while enhancing security.76 Zoom planned

to achieve about 50 per cent redundant capacity in order to manage surges in demand and help to keep the

latency time of Zoom meetings below 150 milliseconds (0.15 second) so that conversations felt natural.77

In 2019, almost 30 per cent of Zoom’s workforce was in China because of lower average worker

salaries.78 However, in 2020, Zoom decided to expand outside China to avoid spillover effects from

increased political hostility toward China, especially in Zoom’s two biggest markets, United States and

India.79 For this reason, Zoom also allowed customers to choose the location of their data centre for

storing cloud recordings of meetings.80

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Yuan believed that a key factor to the company’s success was employees who were happy and motivated.

At Zoom, a “chief happiness officer,” along with her “happy crew,” organized Fun Fridays and other

outings and volunteer days.81 As a result, employee attrition was low at Zoom, a highly preferred

company to work for, and Yuan himself had a 99 per cent approval rating from employees who rated

Yuan on the workplace review site Glassdoor.82 Consistent with Zoom’s culture, its hiring process went

beyond looking only for functional skills to identifying prospective employees who would be happy and

self-motivated.83

THE COMPETITIVE LANDSCAPE

By April 2020, Zoom had emerged as a clear leader in the business videoconferencing market with 300

million daily meeting participants, followed by Microsoft Teams (200 million) and Google Meet (100

million).84 Throughout 2020, all videoconferencing products reported continued growth (see Exhibit 5).

Cisco Webex

Cisco enjoyed a dominant, 46 per cent share of the worldwide video conferencing equipment market.85 Cisco

was also a leading seller of Internet-based telephones.86 In 2019, Cisco was named a leader in the Gartner

Magic Quadrant for meeting solutions for the 12th consecutive year.87 However, also in 2019, Yuan claimed

that Webex was using code from almost two decades earlier, a claim that was hotly contested by Webex.88

In May 2020, Cisco reported that Webex had 500 million meeting attendees in April and saw a record use

of over 5.5 billion meeting minutes in the first 11 days of March 2020.89

In July 2020, Webex introduced features such as the ability to change or blur backgrounds, live

transcription, closed captioning, and post-meeting keyword search.90 In August, Cisco announced the

acquisition of BabbleLabs Inc., a start-up, to improve clarity and productivity for Webex participants while

eliminating background noise.91 In September, Cisco launched a dedicated platform for online learning,

called Webex Classrooms, which featured breakout rooms and content sharing.92

Google Meet

Google launched Google Meet, a derivative of an earlier video chatting app called Hangouts, in 2017 as an

invite-only service.93 In 2019, only a paid Google Workspace account could initiate a Meet. However, in

April 2020, Google announced that anyone with a free Gmail account could initiate a Meet call, with no

limit to meeting duration until September 2020 (later extended to March 2021).94

The number of downloads of Google Meet rose from 5 million in March to 50 million in May 2020.95 In April

2020, Google Meet was adding nearly 2 million new users per day and had more than 100 million educational

users across 150 countries.96 In October, Google reported a third quarter peak of 235 million daily Meet

participants, compared to the peak of 600 million weekly Meet participants in the second quarter.97

In June, Google Meet introduced features that gave more control to hosts, who could now remove participants,

require that participants request permission (“knock”) to enter, mute participants, and more.98 In September

2020, breakout rooms, background blur, and a grid or tile view of up to 49 participants were introduced.99

Features similar to Zoom, such as polling and questions and answers (Q&A), were rolled out in early

October.100 Other features such as non-verbal reactions and hand raise were to be introduced as well.

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In October 2020, Google introduced a video conferencing hardware bundle called Google Meet Series One,

which included a camera, sound-bar with eight microphones, and a touchscreen remote, all of which integrated

with the Google Meet software.101 In that same month, Google unveiled an overhauled productivity suite

rebranded as Google Workspace, which promised stronger integration with Meet and Chat, in addition to the

convenient, one-click integration with Google Calendar, a popular scheduling app.102

Skype and Microsoft Teams

Skype, founded in 2003 by Swedish and Danish entrepreneurs out of Poland, had grown to a global user

base of 663 million users who made 207 billion minutes of voice and video calls and contributed $860

million in revenues in 2010.103 In 2011, Microsoft bought Skype for $8.5 billion,104 and in 2015, launched

Skype for Business after integrating it with an in-house product called Lync.105

At its peak, in March 2020, Skype for Business was being used by 100 million people monthly and by 40

million people daily.106 However, Microsoft had announced that it would retire Skype for Business by August

2021 in favour of Microsoft Teams. Microsoft claimed that Teams would enable stronger integration with

Microsoft’s Office applications and its SharePoint file sharing system, thus enabling a more unified user

experience.107 While Skype for Business with meeting functionality was priced at $5.50 per user per month,

Microsoft Teams was bundled with Microsoft 365 at a combined price of $5 per user per month.108

In June 2020, Slack, seller of a popular app for workplace collaboration, filed a complaint with the European

Commission against Microsoft, accusing it of anti-competitive behaviour by force installing Microsoft

Teams with its market-dominant Office suite, blocking removal of Teams, and hiding the true cost of Teams

to enterprise customers.109 In August 2020, it was estimated that 30 per cent of commercial users of

Microsoft 365 also used Microsoft Teams.110

In September 2020, at its annual power user conference, Microsoft announced several new features for

Microsoft Teams such as the “together mode,” in which all team members could be virtually transported to

a place of their choice. Breakout rooms were introduced from October 2020 along with meeting recaps,

webinar registration and reporting, touchless meeting experience, simplified calling experiences, and

wellbeing and productivity insights for administrators.111

In 2019, Microsoft partnered with meeting room video conferencing hardware providers such as Cisco and

Logitech to enable seamless integration with Microsoft Teams.112 Microsoft also entered into an alliance

with Blue Jeans Network Inc. (BlueJeans), a smaller videoconferencing service provider, allowing

participants to join BlueJeans video meetings directly from Microsoft Teams’ chats.113

Other Competitors

BlueJeans, founded in 2009, was acquired by Verizon Communications Inc. (Verizon), the second-largest

US telecommunications company, in April 2020.114 In June 2020, BlueJeans announced several new

features, such as restricted meetings, waiting rooms, advanced encryption, shared screen control, locking a

meeting to prevent others from joining, meeting transcription, native virtual backgrounds, and reactions

such as hand clapping, hand raise, and thumbs up or down.115 Also in June, BlueJeans reported a 300 per

cent increase in use over its pre-pandemic average and announced alliances with Poly and Facebook.116

Facebook, a social media platform, had entered the enterprise connectivity market in 2015, and in April

2020, it entered group video conferencing through its Messenger Rooms, which had a capacity of 50 people

and no time limit.117 WhatsApp and other social media platforms such as Instagram and Telegram began to

offer video conferencing features, but they were limited in functionality relative to the leading providers.118

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ZOOM FORWARD

What would it take for Zoom to ward off challengers? Perhaps it was another set of upgrades to the Meetings

functionality, or perhaps the network of satisfied customers was enough. Price sensitive customers might

look beyond Zoom and Webex to the likes of Microsoft Teams and Google Meet, which came bundled at

no incremental cost with suites of productivity software.

And then there were the skeptics , who believed that despite Zoom’s superior performance, its valuation

was a bubble that would burst after the COVID-19 pandemic.119 However, these skeptics may have

overlooked the number of users who had made long-term shifts in their way of working and how Zoom’s

other products, such as Zoom Rooms and Zoom Phone, were well-positioned for a post-pandemic world of

hybrid meetings.120 Zoom had also begun experiments with augmented reality and virtual reality to address

issues of “Zoom fatigue” and the perceived lack of a personal touch.121

Nonetheless, had Yuan missed a “silver bullet”—something that might help Zoom dominate the world of

business meetings beyond the pandemic? Could it be a product feature, perhaps, or a new product, or

something else entirely?

Malay Krishna is a professor and Gursimran Gambhir is a student at the S.P. Jain Institute of Management & Research (SPJIMR), Mumbai, India.

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EXHIBIT 1: ZOOM’S STOCK PRICE AND THE S&P 500 (INDEXED TO 100 ON APRIL 30, 2019)

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

2 0 1

9 -0

4 -3

0

2 0 1

9 -0

6 -3

0

2 0 1

9 -0

8 -3

1

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9 -1

0 -3

1

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8 -3

1

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1

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0 -1

2 -3

1

Zoom S&P 500

Source: Created by the case authors based on Zoom Video Communications Inc. “Historical Price Data,” Yahoo! Finance, accessed December 20, 2020; and S&P 500, “Historical Price Data,” Yahoo! Finance, accessed December 20, 2020, https://finance.yahoo.com/quote/ZM/history.

EXHIBIT 2: PRICING FOR SELECTED VIDEO CONFERENCE PRODUCTS (IN US$)

Provider Monthly Subscription per User Annual Subscription per User

Low Midrange High Low Midrange High

Zooma 14.99 19.99 30.00 149.90 199.90 300.00

Cisco Webex 14.99 19.99 29.99 162.00 215.40 323.40

Google Workspace (with Google Meet bundled)

6.00 12.00 18.00 n/ab n/ab n/ab

Microsoft 365 Business plansc (with Teams bundled)

5.00 12.50 20.00 n/a n/a n/a

Microsoft 365 Enterprise plansd (with Teams bundled)

n/a n/a n/a 120.00 384.00 684.00

Note: a Various add-on service features included cloud storage for recordings, larger meetings, and audio calls; b Annual plans were available upon calling Google Workspace sales representative; c Monthly subscription plans for small business owners; included Microsoft Office apps; d Annualized fees that included more applications, services, and analytics for enterprise customers; n/a = not available. Source: Created by the case authors based on “Video Conferencing, Web Conferencing, Webinars, Screen Sharing,” Zoom Video, accessed October 5, 2020, https://zoom.us/pricing; “Cisco Webex Plans and Pricing,” Webex, August 23, 2015, https://www.webex.com/pricing; “Google Workspace (Formerly G Suite): Pricing Plans,” Google Workspace, accessed December 5, 2020, https://workspace.google.com/pricing.html; “Compare All Microsoft Office Products,” Microsoft, April 21, 2020, https://www.microsoft.com/en-us/microsoft-365/business/compare-all-microsoft-365-business-products; “Compare Microsoft 365 Enterprise Plans,” Microsoft, May 7, 2018, https://www.microsoft.com/en-us/microsoft-365/compare-microsoft-365-enterprise-plans.

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EXHIBIT 3: SAMPLE OF CUSTOMER REVIEWS FOR ZOOM AND SELECT RIVALS

Services Positive Comments from Customer Reviews Negative Comments from Customer Reviews Customer Ratingsa

Cisco Webex

“File attachments can be shared among various users which is a huge bonus as instantly people can check and also provide expert comments”b “Users can create web document using the main WebEx meeting site”b

“Restricted access to only invited attendees, even if outside the organization”b “The screen share feature sometimes stops working while in the middle of a meeting but the audio still works. There’s no way to reconnect and continue to share the screen”b

8.2 (1,169)

Google Meet “The interface is seamless to navigate”c “Syncs with your calendar, keeping things organized”b

“The quality of video and audio could be better”c “Accessibility with other web browsers such as Firefox, UC Browser, and Safari”d

8.2 (48)

Microsoft Teams

“Teams is the only platform where we have different applications embedded and we can use those to prepare different types of files within the teams and thus we don't have to scroll outside teams for the same. For example, onenote, Jiracloud, planner, stream, wiki are different platform embedded within Teams to help us use them and complete our tasks”b “It enables us to form team groups within the platform which ultimately helps in team chats and file sharing within the teams and also lets the file to update in real time by all the team members within the group”b

“Teams is a really heavy software considering the vast features it offers and the embedded additional platform like Jiracloud, onenote etc embedded into it which in turn makes the software really slow at times. therefore, efforts could be made to improve its processing power”b “I noticed that whenever I log in daily and directly go to Teams, it takes a quite a lot of time to connect to its server and to come online as compared to other products like zoom which are blazingly fast. Thus the time taken by Teams to connect to its server for the first time could be improved”b

8.3 (824)

Zoom Meetings

“Go live on social media for read only viewers”c “Outlook and Google Calendar compatibility”c “Powerful combination of video conferencing and desktop sharing”d

“Security has been one of the biggest reasons many organizations have stopped using Zoom”d “The Softphone does not work with screen sharing”d

“Breakout rooms should have a option for view only for admins so can view all of them together”d

8.8 (1,851)

Note: a Ratings on a scale from 1 to 10, where 10 is high; the number of ratings is noted in parenthesis; b posted in October 2020; c posted in December 2020; d posted in August 2020. Source: Created by the case authors based on “Cisco Webex Teams, the Best Collaborative Cloud Platform,” TrustRadius, July 27, 2019, https://www.trustradius.com/reviews/cisco-webex- teams-formerly-cisco-spark-2019-07-27-07-48-34; “Google Meet Reviews & Ratings 2021,” TrustRadius, accessed June 19, 2021, https://www.trustradius.com/products/google- meet/reviews; “Microsoft Teams Reviews & Ratings 2021,” , TrustRadius, accessed June 19, 2021, https://www.trustradius.com/products/microsoft-teams/reviews; “Zoom Pricing, Reviews & Ratings 2020,” TrustRadius, accessed December 12, 2020, https://www.trustradius.com/products/zoom/reviews.

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EXHIBIT 4: ZOOMTOPIA, OCTOBER 2020—NEW FEATURES AND FUTURE RELEASE LIST

Zoomtopia 2020 Features Description Expert Reviews (from Computerworld)

Zapps

Zapps are apps (best of breed) that can be used within the Zoom platform to help improve productivity and create more engaging experiences with over 25 launch partners like Coursera, Dropbox, Cameo, etc.

“According to Wayne Kurtzman, research director for social and collaboration at IDCb, reducing the number of ‘screen swaps’ between different apps can help make video conferences feel more seamless.” “This is a game-changer, according to many tech insiders, and a sure-fire bet that will present a new wave of functionality within their platform and unlock new startup opportunities.”

A Marketplace for Immersive Experiences: OnZooms

OnZoom is a comprehensive solution for paid Zoom users to create, host, and monetize events like fitness classes, concerts, stand-up or improv shows, and music lessons on the Zoom Meetings platform.

“In effect, Zoom is making a bet that even after the pandemic subsides, the move toward virtual events won't dissipate.”

E2EE Offering For both free and paid plans. The rollout represents phase 1 of 4 of Zoom’s end-to-end encryption plans announced in May 2020.

“Kurtzman said ‘the benefits of Zoom’s approach created a strong CISOc council and open-source solutions that could help the video conferencing market as a whole.’”

Customizable Software Development Kit (SDKa)

Developers can take advantage of a customizable user interface (UI) and session control, making it easier for them to bring high-quality video, audio, and instant chat to their applications.

UCaaS (Unified Communications as a Service) Platform

Zoom has developed new functionalities for its core unified communications platform including immersive scenes, contactless collaboration, enhanced whiteboarding, Zoom Rooms smart gallery, and much more.

“Will lead to ‘immersive, secure, and collaborative experiences.’”

Zoom’s long-term release features include accessibility support, annotation; per use case SDK demo apps with improved user experience; closing SDK platform feature gaps, and direct share in Zoom for iOS and Android SDK clients.

Note: a SDKs enabled independent developers to customize Zoom for specific contexts; b IDC = International Data Corporation; ISO = Chief Information Security Officer. Source: Created by the authors based on Zoom Video Communications, “Zoom Developer Roadmap,” Trello.com, October 2020, https://trello.com/b/bzKad84M/zoom-developer-roadmap; Charlotte Trueman, “Zoomtopia 2020: Zoom Looks to Super-Charge Videoconferencing,” Computerworld, October 19, 2020, https://www.computerworld.com/article/3586198/zoomtopia- 2020-zoom-looks-to-super-charge-its-videoconferencing.html.

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EXHIBIT 5: SELECTED FINANCIAL AND OPERATIONAL DATA FOR LEADING VIDEO CONFERENCING SERVICE PROVIDERS (IN US$ MILLIONS UNLESS OTHERWISE STATED)

Cisco Webexa Google Workspaceb,c Microsoft 365 for Businessc,d Zoome

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Revenues 298 312 326 342 849 834 843 1,028 4,884 5,418 6,012 6,670 188 328 664 777

Gross Profit 193 202 206 217 432 445 428 524 3,265 3,688 4,116 4,567 156 224 421 518

EBITDA 85 90 89 74 150 152 160 265 1,811 1,967 2,279 2,528 11 122 159 199

Paid Users (in Million) 2.6 3.5 4.7 5.4 29.5 30.5 32.4 33.5 247.4 258.5 260.2 277.7 3.2 5.1 9.7 11.1

Note: a Cisco did not offer separate financial reporting for Webex; the numbers here are authors’ estimates based on sources provided below; b Google did not provide standalone financial data for its Workspace suite (Google Meet was bundled with Workspace); the numbers here are authors’ estimates based on sources provided below; c Microsoft and Google followed a different month-end for fiscal quarter reporting system than Cisco and Zoom; these numbers have been adjusted by the authors for convenience in analysis; d Microsoft did not offer standalone financial data for its 365 Suite (Microsoft Teams was bundled with 365); the numbers here are authors’ estimates based on sources provided below; e Zoom reported only those number of paying customers that had more than 10 employees; EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization.

Source: Created by the case authors based on Motley Fool Transcribing, “Cisco Systems (CSCO) Q1 2021 Earnings Call Transcript,” Motley Fool, November 12, 2020, https://www.fool.com/earnings/call-transcripts/2020/11/12/cisco-systems-csco-q1-2021-earnings-call-transcrip/; “Investor Relations—Financial Information—Financial Results—Cisco,” Cisco Systems, November 12, 2020, https://investor.cisco.com/financial-information/financial-results/default.aspx; “Cisco Webex Market Share and Competitor Report | Compare to Cisco Webex, Zoom, GoToWebinar,” Datanyze, February 6, 2018, https://www.datanyze.com/market-share/web-conferencing--52/cisco-webex-market-share; Zoom Video Communications, “0001585521-20-000299 | 10-Q – Zoom,” SEC filing, December 4, 2020, https://investors.zoom.us/sec-filings/sec-filing/10-q/0001585521-20-000299; Motley Fool Transcribers, “Alphabet Inc (GOOGL) Q3 2020 Earnings Call Transcript,” Motley Fool, October 30, 2020, https://www.fool.com/earnings/call-transcripts/2020/10/30/alphabet-inc-googl-q3-2020-earnings-call- transcrip; “Alphabet Investor Relations,” Alphabet, October 30, 2020, https://abc.xyz/investor/#numbers; “Global Cloud Infrastructure Market Q3 2020,” Canalys Estimates, October 29, 2020, https://www.canalys.com/newsroom/worldwide-cloud-market-q320?time=1609511391; David Gewirtz, “What Happens to Your G Suite Unlimited Storage When Google Moves You to Workspace?,” ZD Net, November 2, 2020, https://www.zdnet.com/article/what-happens-to-your-g-suite-unlimited-storage-when-google-moves-you-to-workspace; “FY21 Q1—Income Statements—Investor Relations—Microsoft,” Microsoft, October 29, 2020, https://www.microsoft.com/en-us/Investor/earnings/FY-2021-Q1/income-statements; Mary Jo Foley, “Microsoft 365 Is Big and Getting Bigger Fast,” ZD Net, July 28, 2020, https://www.zdnet.com/article/microsoft-365-is-big-and-getting-bigger-fast.

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ENDNOTES

1 This case has been written on the basis of published sources only. Consequently, the interpretations and perspectives presented in the case are not necessarily those of Zoom Video Communications Inc. or any of its employees. 2 Rachel Phua, “The Future of Work Is a Hybrid Model, Not a Completely Remote One, Says Zoom CEO Eric Yuan,” CNA, August 25, 2020, https://www.channelnewsasia.com/news/singapore/zoom-ceo-eric-yuan-future-of-work-hybrid-remote-13050880. 3 “Downloads of Zoom and Other Meeting Apps Soar in 2020,” Proactive Investors UK, December 23, 2020, https://www.proactiveinvestors.co.uk/companies/news/937284/downloads-of-zoom-and-other-meeting-apps-soar-in-2020-937284.html. 4 Joydeep Bhattacharya, “Eric Yuan, Founder/CEO of Zoom on How His Company Stacks up to the Competition,” YouTube video, 1:53, posted by Canaan, March 21, 2020, https://youtu.be/oJ_CPQ0XvAI. 5 Courtney Connley, Abigail Johnson Hess, and Jennifer Liu, “13 Ways the Coronavirus Pandemic Could Forever Change the Way We Work,” CNBC @ Work (blog), April 29, 2020, https://www.cnbc.com/2020/04/29/how-the-coronavirus-pandemic-will-impact-the-future-of-work.html. 6 Erinn Wolfe, “The History of Video Conferencing from 1870 to Today,” Lifesize Blog (blog), May 1, 2019, https://www.lifesize.com/en/video-conferencing-blog/history-of-video-conferencing. 7 All dollar amounts are in USD unless otherwise indicated. 8 Wolfe, “The History of Video Conferencing.” 9 “A Brief History of Video Conferencing,” International Conference Calls and Global Call Forwarding Information (blog), August 17, 2017, https://www.aitelephone.com/blog/history-video-conferencing. 10 Christine Y. Chen, “The IM Invasion Instant-Messaging Providers Are Targeting Corporations in a Big Way. Does Using IM Make Sense?,” Fortune, May 26, 2003, https://money.cnn.com/magazines/fortune/fortune_archive/2003/05/26/343100/index.htm. 11 “History of Skype: Complete History of Skype Software Application,” accessed September 21, 2020, https://history- computer.com/Internet/Conquering/Skype.html. 12 Yaniv Masjedi, “What Is ISDN? What Are Its Advantages? (updated),” Nextiva Blog (blog), October 14, 2019, https://www.nextiva.com/blog/what-is-isdn.html. 13 “Polycom Company History: 25 Years of Innovation,” Poly, accessed September 18, 2020, https://www.polycom.com.sg/company/about- us/history-of-innovation.html [no longer available]. 14 “WebEx Communications, Inc.: Company Profile, Information, Business Description, History, Background Information on WebEx Communications, Inc.,” Reference for Business, accessed September 18, 2020, https://www.referenceforbusiness.com/history2/97/WebEx- Communications-Inc.html; “History of Skype”; Wolfe, “The History of Video Conferencing”; and “GoToMeeting: Profile,” Craft, accessed September 18, 2020, https://craft.co/gotomeeting. 15 Grand View Research, “Video Conferencing Market Worth $6.7 Billion by 2025 | CAGR: 9.2%,” press release, Bloomberg, August 1, 2019, https://www.bloomberg.com/press-releases/2019-08-01/video-conferencing-market-worth-6-7-billion-by-2025-cagr-9-2-grand- view-research-inc; Peter Cohan, “Can Cisco Respond To Zoom’s Challenge In $20B Videoconferencing Market?,” Forbes, March 8, 2019, https://www.forbes.com/sites/petercohan/2019/03/08/can-cisco-respond-to-zooms-challenge-in-20b-videoconferencing-market. 16 Mallory Newall, “As COVID-19 Quarantine Continues, Desire for Virtual Community Grows but Loneliness Persists,” Ipsos, April 21, 2020, https://www.ipsos.com/en-us/news-polls/newsy-COVID-19-April. 17 Grand View Research, Video Conferencing Market Size: Industry Growth Report, 2020-2027, April 2020, https://www.grandviewresearch.com/industry-analysis/video-conferencing-market. 18 Benj Edwards, “History of Video Calls: From Fantasy to Flops to Facetime,” PC World, accessed September 21, 2020, https://www.pcworld.idg.com.au/slideshow/350404/history-video-calls-from-fantasy-flops-facetime. 19 Edgar Cervantes, “Zoom vs Facetime: Which Is Right for You?,” Android Authority, August 12, 2020, https://www.androidauthority.com/zoom-vs-facetime-1106307. 20 A firewall was a network security device that monitored incoming and outgoing network traffic and permitted or blocked data packets based on a set of security rules. 21 Skip Chilcott, “Solving the 7 Biggest Challenges of Video Conferencing,” Technology Marketing Corporation, April 23, 2018, https://unified-communications.tmcnet.com/topics/unified-communications/articles/437903-solving-7-biggest-challenges-video- conferencing.htm; Klaris Chua, “5 Common Problems People Associate with Video Conferencing,” Martech Advisor, February 12, 2018, https://www.martechadvisor.com/articles/interactive-marketing/5-common-problems-people-associate-with-video-conferencing. 22 Jaikumar Vijayan, “10 Alternatives to Gartner Magic Quadrant, Forrester Wave,” Tech Beacon, September 16, 2015, https://techbeacon.com/enterprise-it/10-crowdsourced-alternatives-gartner-magic-quadrant-forrester-wave. 23 Yitzi Weiner, “The Inspiring Backstory of Eric S. Yuan, Founder and CEO of Zoom,” Medium, July 6, 2018, https://medium.com/thrive-global/the-inspiring-backstory-of-eric-s-yuan-founder-and-ceo-of-zoom-98b7fab8cacc. 24 Sohini Mitter, “India Is Zoom’s Second-Largest Market, Founder Eric Yuan Shares at TiE Delhi Event,” Your Story, August 7, 2020, https://yourstory.com/2020/08/india-zoom-second-largest-market-founder-eric-yuan-tie-delhi. 25 Ankita Chakravarti, “US Refused Visa to Zoom Founder Eric Yuan 8 Times, Now His App Is Running the World and He Is a Billionaire,” India Today, March 30, 2020, https://www.indiatoday.in/technology/features/story/us-refused-visa-to-zoom-founder-eric- yuan-8-times-now-his-app-is-running-the-world-and-he-is-a-billionaire-1661315-2020-03-30. 26 Taylor Nicole Rogers, “Meet Zoom Billionaire Eric Yuan, Who’s Made $4 Billion in 2020 so Far,” Business Insider, September 9, 2020, https://www.businessinsider.com/meet-zoom-billionaire-eric-yuan-career-net-worth-life. 27 Tom Huddleston Jr., “Zoom’s Founder Left a 6-Figure Job Because He Wasn’t Happy—and Following His Heart Made Him a Billionaire,” CNBC, August 21, 2019, https://www.cnbc.com/2019/08/21/zoom-founder-left-job-because-he-wasnt-happy-became-billionaire.html. 28 Hiten Shah, “How Zoom Became the Best Web-Conferencing Product in the World in Less Than 10 Years,” FYI, December 2, 2019, https://usefyi.com/zoom-history. 29 Bhattacharya, “Eric Yuan, Founder/CEO of Zoom.” 30 David Pierce, “Zoom Conquered Video Chat—Now It Has Even Bigger Plans,” Protocol, March 16, 2020, https://www.protocol.com/zoom-videoconferencing-history-profit. 31 Molly Sloan, “The 3 Secrets Behind Zoom’s Triple-Digit Growth,” Drift, April 10, 2020, https://www.drift.com/blog/how-zoom-grew. 32 Rogers, “Meet Zoom Billionaire Eric Yuan.”

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33 “Zoom’s Year in Review: Advancing Business Communications in 2019 and Beyond,” Zoom Blog (blog), December 31, 2019, https://blog.zoom.us/zoom-year-in-review-2019; and “Zoom Video Communications Net Promoter Score 2020 Benchmarks,” Customer Guru, accessed September 9, 2020, https://customer.guru. 34 Michal Lev-Ram, “Here’s Why Zoom Was Zooming Even before the Coronavirus Pandemic,” Fortune, March 18, 2020, https://fortune.com/2020/03/18/zoom-is-zooming-despite-coronavirus. 35 Newall, “As COVID-19 Quarantine Continues.” 36 “Businesses @ Work 2020” (technology industry trend report), Okta, accessed September 9, 2020, https://www.okta.com/businesses-at-work/2020. 37 Sloan, “The 3 Secrets.” 38 “Zoom, the Profitable Tech Unicorn, Prices IPO above Range,” Tech Crunch (blog), accessed September 19, 2020, https://social.techcrunch.com/2019/04/17/zoom-the-profitable-tech-unicorn-prices-ipo-above-range; and “How Zoom Rose to the Top During Social Distancing,” YouTube video, 13:05, posted by CNBC, April 4, 2020, https://youtu.be/GnmoVuBdAE4. 39 Jason Aten, “Zoom Became the Most Important App in the Business World Overnight. 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