Zhipu’s ZCode tool caught uploading users’ code to cloud

Chinese AI company Zhipu's coding assistant ZCode was caught packaging entire developer workspaces and uploading them to Alibaba Cloud without consent, triggering a security storm among developers.
The issue was discovered on September 18 by a developer who noticed a 313-megabyte encrypted file and logs showing ZCode had compressed a commercial workspace — 345.5MB across 42,411 files — and tried uploading it 564 times. The culprit was a default-on "Codebase Indexing" feature with no visible off switch.
Zhipu apologised, disabled the feature, shipped a fix, and later enabled a zero-data-retention option. But users found the uploaded data was encrypted with a backend key held only by Zhipu, so they could not verify deletion.
A briefing on October 2 said one affected enterprise had found 42,000 of its source files transmitted and demanded a written response by October 10. Compensation has been expanded three times as around 400 users sought redress.
The episode matters because AI coding tools sit inside a developer's most sensitive files. Trust, once uploaded, cannot be patched.
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