Since Tuesday, internet security company ZenGuard has a new owner in Kape Technologies. The multi-platform security software business (mainly focusing on virtual private networks), was bought for $5.55 million (€4.8 million).

ZenGuard’s main product is ZenMate VPN, which will now be the second high-profile VPN on the Kape Technologies roster – in 2017, the Israeli company bought the Romanian CyberGhost. This move adds to the company’s presence in Europe because ZenMate is headquartered in Berlin.

Yet this acquisition creates more cause for concern than excitement as both entities have had well-documented issues in the past. Let’s start with ZenMate:

It is based in a 14-eyes country, meaning your personal data could end up in the hands of intelligence agencies not only in Germany but also, for example, the US or UK.  Their Privacy Policy also mentions that when registering, your IP and timestamp will be stored, which can be transferred to third-parties if there’s a statutory obligation or if it serves the aim of criminal prosecution. Emails you’ve sent are also stored but not sent to third parties. Also if you would like to use your ‘right to be forgotten’, ZenMate will only inform third-parties about the need to delete your data (meaning it’s up to you to make sure your right to be forgotten has not been violated). On ZenMate’s website, there are YouTube, Twitter, Facebook, and Instagram plug-ins that track the pages you visit and match that information with your social network profile (if you’re logged in on the same browser). In short, ZenMate is by no means a “no logs” policy VPN. Finally, the English version of the Privacy policy is a translation of the German original, which prevails in case of a dispute.

Speaking of CyberGhost’s owner Kape, their CEO Ido Erlichman seems to have a genuine interest in protecting your privacy:

“The provision of privacy and data protection is a key focus for us, and we are excited to have ZenMate’s team in Berlin join our mission.”
– Ido Erlichman, CEO of Kape Technologies

Panama paper

Unfortunately, actions speak louder than words. Kape Technologies (previously known as Crossrider) is an Israeli company that has been linked to malicious software, such as ad injectors, which Symantec classifies as adware. To make matters worse, their owner, Teddy Sagi, has been linked to 16 offshore accounts by the Panama Papers. To make matters worse still, the same guy is the founder of online gambling software developer Playtech and has also been sentenced for manipulating bond prices.

The acquisition comes with an agreement to restructure ZenMate and take it from last year’s $1.27 million (€1.1 million) loss to making a profit in 2018 Q1. Kape also expects ZenMate to start increasing their earnings per share as soon as the first year of ownership.

This seems to be good news for ZenMate staff and ownership, allowing the company to escape their losses (which would have been hard to do with an in-progress product and an average user base). Yet when it comes to VPN users, this seems to crush any hopes that ZenMate VPN will have a good reputation among competitors.

There is also the question of whether ZenMate may be discontinued in favor of strengthening CyberGhost VPN using the newly-acquired human resources. But that probably only matters to those of the 50,000 premium users, who have recently paid for the annual plan.