New Yahoo SNAFU may poo-poo Verizon woo

After Yahoo has announced more than one billion user accounts were effected in its 2013 data breach leaving one glaring question; how much can Verizon take before it snaps?

Jamie Davies

December 15, 2016

3 Min Read
New Yahoo SNAFU may poo-poo Verizon woo
Ofcom's decision has put some noses out of joint

After Yahoo has announced more than one billion user accounts were effected in its 2013 data breach leaving one glaring question; how much can Verizon take before it snaps?

Back in September, the Yahoo team confirmed rumours of a data breach which exposed the accounts of more than 500 million users, a number which surprised a few in the industry; who knew Yahoo had that many users. The most recent admission is even more baffling, one billion is a shockingly high number, and just to put things in perspective, that’s almost one in seven people on the planet.

“As Yahoo previously disclosed in November, law enforcement provided the company with data files that a third party claimed was Yahoo user data,” the company said in a statement on its website. “The company analysed 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, Yahoo believes an unauthorized third party, in August 2013, stole data associated with more than one billion user accounts. The company has not been able to identify the intrusion associated with this theft. Yahoo believes this incident is likely distinct from the incident the company disclosed on September 22, 2016.”

Yahoo is currently in the process of contacting users who may have been impacted by the breach, stating names, email addresses, telephone numbers, dates of birth, hashed passwords (using MD5) and, in some cases, encrypted or unencrypted security questions and answers, may have been stolen. Investigators do not believe passwords in clear text, payment card data, or bank account information. Payment card data and bank account information were stolen however.

While this admission is news-worthy alone, perhaps a more interesting question in the impact it will have on Verizon’s acquisition of the struggling brand. The Verizon team has proved to be resilient in the face of adversity, however you have to wonder how many more of these potentially deal-breaker announcements it can take.

The Yahoo acquisition by Verizon was announced in July for a healthy $4.83 billion, and since then Yahoo execs admitted 500 million users had their accounts accessed and details stolen, rumours surfaced about its partnership with the US government intelligence services to scan all its customers’ emails for keywords, Verizon execs tried to knock off $1 billion from the asking price and it’s top lawyer has implied there are clauses which it could pack out of the deal. It’s been a rollercoaster ride and there surely must be a few Verizon execs wondering whether it’s the hassle.

Should the deal continue, this could potentially mean one of two things. Either, the potential to grow through acquiring Yahoo’s media assets exceeds the hassle, or the purchase is so far along there isn’t any way to back out at this stage.

From the media assets perspective, Yahoo does own some attractive brands, namely its Yahoo news and content sites, but also Flickr, and Tumblr. Combining these assets with its current portfolio will see Verizon top 25 major internet brands as well as Yahoo’s e-mail client, which it claims is more than 225 million customers. Verizon has been looking to diversify its revenue channels with the mobile media market a prime target, as cash-cow business units, such as wireless, have been suffering in recent months.

While the need to diversify to grow (or even maintain) revenues is critical for all telcos, the Verizon team must be starting to wonder how much of a benefit bringing in a somewhat tainted Yahoo brand would be. Assuming the numbers are accurate, how long these customers stick around considering the number of Yahoo blunders remains to be seen. Like a staggering boxer in the eighth round, you have to wonder how many more blows this deal can take.

In any case, it’s an early Christmas ‘present’ the telco really could have done without.

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