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Zoom Video's $15 Billion Purchase of Five9 Faces DOJ Scrutiny on China Ties

Zoom Video has run into trouble with U.S. regulators before over its ties to China.

The Justice Department is leading an investigation into Zoom Video Communications  (ZM) - Get Zoom Video Communications (ZM) Report and its deal to buy Five9  (FIVN) - Get Five9 Inc. Report for $15 billion due to potential national security risks posed by the company's ties to China. 

Though Zoom is an American company, the DOJ requested that an interagency committee, known as the Committee for the Assessment of Foreign Participation in the U.S. Telecommunications Service Sector, review a license application to see if the deal "poses a risk to national security or law enforcement interest," a letter posted on the Federal Communications Commission's website said. 

"USDOJ believes that such risk may be raised by the foreign participation (including the foreign relationships and ownership) associated with the application, and a review by the Committee is necessary to assess and make an appropriate recommendation as to how the Commission should adjudicate this application," the letter stated. 

Shares of Zoom Video were down 0.5% to $279.16 at last check Tuesday afternoon. Five9 shares were down 0.6% to $170.53.

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“The Five9 acquisition is subject to certain telecom regulatory approvals,” a Zoom spokeswoman told the Wall Street Journal on Monday. “We have made filings with the various applicable regulatory agencies, and these approval processes are proceeding as expected.”

Zoom Video also said it expects to receive regulatory approvals by the first half of next year, leaving the deal on track to close as originally intended. 

Last year, the Justice Department charged one of Zoom's China-based executives with conspiring to disrupt videoconference commemorations of democracy protests in Tiananmen Square.