Will Facebook's 'Rooms' Doom Zoom?

New version of Messenger could be stiff competition for video-conferencing firm
By Rob Quinn,  Newser Staff
Posted Apr 27, 2020 1:11 PM CDT
Will Facebook's 'Rooms' Doom Zoom?
"Clearly the Zoom platform is providing an incredibly valuable service to our global users during this challenging time," Zoom CEO Eric Yuan says.   (AP Photo/Mark Lennihan, File)

Zoom's share price has more than doubled since the first coronavirus case was reported in the US—but a new Facebook feature could spell trouble for the company. The video conferencing company's shares surged late last week on news that it would be joining the Nasdaq 100, but they dipped again when Facebook unveiled Messenger Rooms, a video conference version of its Messenger app, CNBC reports. Zoom and similar companies have seen user numbers explode amid stay-at-home orders. Zoom CEO Eric Yuan says user numbers grew from 200 million to 300 million between mid-March and mid-April. In December, it had 10 million users.

Facebook CEO Mark Zuckerberg says Messenger Rooms will allow up to 50 people to join a meeting, with no time limit, CNN reports. Up to 100 people can join a meeting in the free version of Zoom—but only for 40 minutes. Participants will not have to be Facebook users. Zuckerberg says people will be allowed to jump between chats to create "spontaneity and serendipity," Bloomberg reports. Still, not everyone thinks Facebook's entry is bad news for Zoom. At Seeking Alpha, an analysis by Dilantha De Silva suggests it might even help the younger company. "Contrary to the belief and the reaction of many investors, I believe Zoom will benefit from the roll-out of Messenger Rooms as this will take some of the free users out of its platform." He notes that investors are eager for Zoom's earnings report on June 4. (Zoom has been having serious growing pains.)

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