Verizon wants to abandon deal with Yahoo due to user data leakage

Verizon Communications Inc. this summer, Yahoo offered $ 4.83 billion of its main Internet business and company-owned real estate, which is about eight times lower than the company's market capitalization. In June, at the end of the bidding, Yahoo's capitalization amounted to $ 37 billion. Under the terms of the deal, the Chinese company’s stakes in the Chinese Alibaba Group (15%) and Yahoo Japan (35.5%) total value of about $ 40 billion, and the portfolio of non-core patents remain in Yahoo.

Yahoo's main Internet business is postal service, search, news and sports resources, financial tools and instant messenger. Verizon planned to integrate all this into its own Internet business. But now the company is looking for the opportunity to either refuse to deal with Yahoo, or else to amend the contract, reducing by one billion the amount offered earlier. The reason is the loss of Yahoo user account data.

As you know, this morning, many Yahoo users received a letter confirming the leakage of user data. We are talking about user names, email addresses, phone numbers, dates of birth, password hashes (MD 5). Perhaps, in addition to the above, the attackers stole some more data. Fortunately, the servers with information on bank cards and accounts were not compromised.
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What happened at all?

The letter, which was received by users, states that law enforcement officers in November 2016 provided Yahoo with some databases obtained from third parties for analysis. This party, in turn, argued that the information provided is the data of Yahoo user accounts. Specialists of the company analyzed all received and found out that these are really user accounts. In the course of the proceedings, it turned out that the data was stolen not now, but in August 2013, and an entire billion accounts, including about 150 thousand accounts of government officials, leaked to the network. At the same time, the corporation could not determine the fact of hacking. According to representatives of Yahoo, this hacking is different from the incident of September 22, 2016.

Another hack? Yes, this fall, Yahoo acknowledged another data breach, confirming rumors that began to circulate in early August 2016. Moreover, the situation turned out to be even more severe than the information security researchers had assumed. It turned out that in 2014 there was a leak of user data, which affected about 500 million accounts. In the stolen database, user names, email addresses, phone numbers, dates of birth, password hashes and secret questions were found with answers to them both in the open and in the closed form.

In September, the corporation claimed that the data leak was organized by government hackers. Unfortunately, no evidence in favor of this point of view was given at the time.

Well, and where is Verizon?

As a buyer of Yahoo's online services, Verizon is keen to see everything go smoothly. Now it does not seem that the transaction is proceeding as originally planned. Despite the fact that AOL CEO Tim Armstrong and his team (AOL is now part of Verizon) are making a plan to integrate Yahoo products into Verizon’s business, another group of specialists is exploring the possibility of reducing the price of the transaction or completely abandoning it. This was stated by a source Bloomberg, who wished to remain anonymous. The buyer in the current situation wants Yahoo to take full responsibility for this incident.

The second group is led by Verizon General Counsel Craig Silliman. He and his colleagues assess the damage caused by the leak and are working to influence the Yahoo management, forcing the company to make a "discount". “As we reported, we continue to assess the situation, while Yahoo is doing the same. We will analyze the impact of this factor (hacking, - approx. Ed.) Before making the final conclusions, “- said in a statement Verizon.


Marissa Meyer, head of Yahoo, trying to find a way out of this situation

By the way, in the fall, Silliman warned Yahoo about the “material consequences” of the previous hack, already trying to influence Yahoo’s leadership. More precisely, he demanded to reduce the amount of the transaction announced earlier. Meanwhile, Yahoo shares fell 6.5% to $ 38.25. Verizon shares rose about 1% to $ 52.07.

Most likely, Verizon representatives are unlikely to give up the deal, as the company’s management now says that it makes sense for the core business and will affect Verizon’s development strategy. The company plans to expand, and in the first place, these plans relate to the development of mobile media resources and advertising business. Here, hundreds of millions of Yahoo users obviously will not be superfluous.

By the way, now some of them are filing a lawsuit against Yahoo, accusing the company of not being serious enough about protecting the information of its customers. Within a few hours after it became known about the burglary, the first plaintiff sued the company. “Yahoo is in no way able to provide the appropriate level of privacy protection for its users. This information is constantly compromised and remains vulnerable, ”he stated in the lawsuit.

It seems that there is some truth. On the other hand, some experts suggest that user data was stolen through a “hole” created for the NSA in due time. And repeated hacks, which use the same methods of data theft, can not fail to attract attention. Is there any connection or is it just a "conspiracy theory" - it’s not for us to judge, conclusions can be made only after a thorough analysis of the situation of Yahoo and Verizon.