Zoom acquires secure messaging service Keybase as it looks to address security backlash

May 7 2020
by Raul Castanon-Martinez, Johan Vermij


Zoom has announced the acquisition of secure messaging service Keybase in an effort to address security and privacy concerns. The company has seen unprecedented growth but also recently experienced a major backlash due to security gaps that allowed malicious attacks. This led to several high-profile organizations – including the German Foreign Ministry, the Australian Defense Force, NASA, the US Senate and SpaceX – asking their employees to stop using the videoconferencing service. Zoom also faces an investor lawsuit, in addition to being sued in California for allegedly sharing user data with Facebook. In April, CEO Eric Yuan outlined a 90-day plan to bolster key security initiatives and the firm hired Facebook's former CSO as an outside adviser to improve security practices.

Snapshot Snapshot


Zoom Video Communications




Cloud communications

Deal value


Date announced

May 7, 2020



The 451 Take

Zoom has been in the spotlight given its meteoric growth, even more since it stepped up to the challenge of scaling its platform to support millions of users during the COVID-19 pandemic. Given its success, it makes sense that the company would be under intense scrutiny and become the target of malicious actions. However, the security backlash it experienced is not unfounded and highlights important security gaps in its platform. Reaching for Keybase should allow it to build a strong team of security professionals – coupled with other initiatives in its 90-day plan, this demonstrates that Zoom is addressing the security gaps in its platform. This will not bring back all of the customers it has lost, but it should be acknowledged that the vendor is skillfully navigating challenges that in many ways are unprecedented. This should help Zoom enhance its image and restore confidence among enterprise users and investors.

Deal details

Terms of the transaction were not disclosed. Keybase employees will join Zoom's security engineering team and will focus on identifying, addressing and improving the security and privacy capabilities in the buyer's platform. Cofounder and developer Max Krohn will lead the security engineering team, reporting directly to Yuan. Yuan and Krohn did not share any immediate plans for the Keybase product.

Deal rationale

This deal is primarily an 'acq-hire' that brings into Yuan's team an experienced group of security and encryption engineers. Encryption is one of the key issues in the lawsuit brought forth by shareholders, which alleges a discrepancy in its definition of end-to-end encryption from the commonly accepted definition. Its expanded security engineering team should allow Zoom to accelerate efforts to revamp its product roadmap with end-to-end encryption and support other initiatives in its 90-day plan.

Target profile

Founded in 2014 and based in New York City, Keybase started out as a directory for public encryption keys and has expanded to provide end-to-end encrypted chat and file sharing. This positions the startup within a subsegment we identify as secure, private communications. Vendors in this category provide a high level of security and are typically niche players, targeting individuals and organizations that are very sensitive to privacy and security – Zoom's privacy track record could be problematic for them. One of Keybase's main features is that it works with verified accounts of user identities, which could be an interesting capability that could enhance and differentiate Zoom's video offering.

Acquirer profile

San Jose-based video collaboration SaaS developer Zoom was founded in 2011 by CEO Eric Yuan, formerly corporate VP of engineering in charge of collaboration software at Cisco. The company, which went public in April 2019, currently has over 2,500 employees, most of them located in the US. Zoom was initially positioned as a videoconferencing vendor but is looking to provide a comprehensive unified communications-as-a-service (UCaaS) offering with Zoom Phone and other new features and integrations it announced earlier this year. The company experienced significant growth since its early days but has seen an unprecedented surge in demand as a result of the coronavirus quarantine. In April, it reported that it had surpassed 300 million daily Zoom meeting participants, a 50% increase from the 200 million it had reported earlier that month and a huge jump from the 10 million it had reported just a few months before, in December.


A key rival is videoconferencing SaaS supplier BlueJeans, which last month was scooped up by Verizon Communications to complement the acquirer's UCaaS portfolio and accelerate its 5G product roadmap, helping customers develop videoconferencing services for telehealth, online education and remote training. Key competitors also include Cisco Webex, Google Meet and Microsoft Teams, which have all likewise experienced a surge in demand due to the pandemic.

Other contenders include cloud communications providers 8x8, Mitel, RingCentral and Vonage, which have all launched new video collaboration products in the past six months to complement their respective UCaaS offerings. Additionally, the competitive landscape includes Jitsi Meet, a free open source server software for community-driven videoconferencing; secure team collaboration platform specialist Symphony; and secure enterprise mobile messaging application Teamwire.