Verizon Wants A Yahoo Price Cut After Company Reveals Another, Massive Hack Attack

Failures

from the this-is-not-going-well dept

Earlier this year Verizon was understandably irritated when it learned (just two days before the public) that Yahoo had failed to disclose a massive hack of the company’s systems during the companies’ $4.8 billion merger negotiations. Reports suggested that Verizon, who is attempting to pivot from broadband to ads and content, wanted a $1 billion reduction in the asking price and another $1 billion set aside for the inevitable lawsuits. Given its NSA ties, Verizon was likely much less concerned about reports revealing that Yahoo also went out of its way to help the government sniff through subscriber e-mail accounts en masse.

Fast forward to this week, and things just got notably more complicated for both companies. While the first Yahoo hack revealed the personal data of roughly 500,000 Yahoo subscribers, Yahoo just confirmed a second attack by the same party that the company says revealed the personal data of 1 billion Yahoo users. Yahoo says this second attack was only revealed once law enforcement reached out to Yahoo with snippets of the compromised data in hand. But in a website post by Yahoo?s chief information security officer Bob Lord, the company effectively admits it still doesn’t actually know how the hackers got this information:

“As we previously disclosed in November, law enforcement provided us with data files that a third party claimed was Yahoo user data. We analyzed this data with the assistance of outside forensic experts and found that it appears to be Yahoo user data. Based on further analysis of this data by the forensic experts, we believe an unauthorized third party, in August 2013, stole data associated with more than one billion user accounts. We have not been able to identify the intrusion associated with this theft. We believe this incident is likely distinct from the incident we disclosed on September 22, 2016.”

Not too surprisingly, Verizon continues to be frustrated by the revelations, while simultaneously using them to drive down the Yahoo asking price:

“A legal team led by Verizon General Counsel Craig Silliman is assessing the damage from the breaches and is working toward either killing the deal or renegotiating the Yahoo purchase at a lower price, the person said. One of the major objectives for Verizon is negotiating a separation from any future legal fallout from the breaches. Verizon is seeking to have Yahoo assume any lasting responsibility for the hack damage, the person said.”

While some outlets continue to suggest the deal could be killed entirely, Yahoo is critical to Verizon executives’ beliefs they can transform Verizon from stodgy old telco into a Millennial-focused media and advertising juggernaut. The problem is that Verizon’s attempt to become the next Google or Facebook isn’t going particularly well. Being a pampered telecom monopoly for a generation doesn’t imbue you with the kind of DNA required to make such a disruptive transition, resulting in the company’s Millennial-focused streaming service Go90 being a “dud” in the words of Verizon’s own partners.

Verizon will likely continue undaunted in its plan to magically become Google by gobbling up failed 90s internet brands. And while it’s far from certain that Verizon has the chops to successfully make this transition work, the least we can hope is that the telco brings something vaguely resembling security standards along for the ride as the deal stumbles its way toward its inevitable conclusion.

Filed Under: cybersecurity, hack, merger, privacy
Companies: verizon, yahoo