The novel coronavirus crisis has created a surge in usage of many online communications platforms, including Microsoft Skype and Facebook (NASDAQ: FB). Zoom Video Communications (NASDAQ: ZM) has likewise seen a massive influx of users as people try to connect online for both work and personal reasons. Zoom's skyrocketing growth has also revealed serious privacy and security issues, with CEO Eric Yuan penning a blog post earlier this week to address the concerns. He noted that the platform reached 200 million daily meeting participants last month.
Zoom had recently conceded that it was unsure if it would be able to convert many of the new users, which are using the free version of the service, into paying customers. Facebook now wants to take a bite out of Zoom's boom.
Unbundling Messenger on desktop
This week, Facebook released a desktop app for Messenger, its flagship messaging service in the U.S. The new stand-alone app supports free and unlimited group video calls, syncs across mobile and desktop platforms, and makes the service more accessible. Historically, desktop users had to access Messenger within a web browser after logging into Facebook.
The tech giant noted that the past month has seen a "more than 100% increase" in desktop-based audio and video calling on Messenger. Last week, Facebook warned that its ad business was being impacted, and that total messaging in countries hit hard by COVID-19 had jumped by over 50%, with voice and video calling more than doubling on Messenger and WhatsApp.
It's also worth noting that the new Messenger app's interface is nearly identical to Apple's (NASDAQ: AAPL) iMessage on the Mac. Back in 2018, CEO Mark Zuckerberg went as far as to say that Apple is Facebook's "biggest competitor by far" in messaging, particularly in markets where the iPhone has a strong position (like the U.S.). In essentially unbundling Messenger and making it more convenient to access, Facebook is taking a shot at both Zoom and Apple.
However, Facebook faces the same challenge as Zoom in actually monetizing that engagement. Facebook has never really effectively monetized Messenger, other than half-baked efforts over the years to insert ads into the platform. Yuan has said that Zoom isn't worried about monetization because "that's not our focus" during the crisis. Zoom is just trying to connect people amid a chaotic and unprecedented time. Apple monetizes iMessage by selling iPhones, as well as digital content within the messaging platform.
In a regulatory filing this week, Zoom also disclosed that Yuan had donated 300,000 shares of Zoom to a charitable donor-advised fund. (Yuan will also receive a sizable tax deduction, since stock gifts are valued at the time of donation and Zoom shares have nearly doubled year to date.)
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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Apple and Facebook. The Motley Fool owns shares of and recommends Apple, Facebook, Microsoft, and Zoom Video Communications and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, and short May 2020 $120 calls on Zoom Video Communications. The Motley Fool has a disclosure policy.
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