Yahoo's latest security disaster may well be the final straw for Verizon, which announced its proposed $4.83 billion acquisition of the web giant earlier this year. That deal is looking increasingly precarious in the wake of two massive Yahoo security failures that have compromised user data on an extraordinary scale.
A week after the deal was announced in July, rumors began to swirl of a possible data breach affecting up to 200 million users. In September, Yahoo confirmed that its systems had suffered a serious data breach in 2014, in which information relating to over 500 million accounts was compromised. Aside from the fact that it took the company two years to detect and disclose details of the incident, it also emerged that Yahoo had said nothing about it to Verizon until two days before its public announcement.
Unsurprisingly, Verizon was said to be demanding a chunky discount after that, but some rumors suggested that it might even be considering an exit strategy. Those rumors have now fired up again, after Yahoo reported a second, even larger data breach this week, affecting as many as one billion users.
Bloomberg reports that Verizon is still proceeding as planned on one front, working on its post-acquisition strategy to integrate Yahoo with its own operations if the deal goes through. But a second working group has reportedly been established, isolated from the integration team, to carefully examine the terms of the deal, and to determine the best course of action - even if that means extricating itself from the acquisition.
Even if Verizon continues with the purchase, and successfully negotiates a lower price, the company's legal team wishes to ensure that it's not burdened by any future financial impact - particularly from costly litigation - as a result of Yahoo's security failures.
Indeed, since the latest breach, a Yahoo user has already filed a class action lawsuit against the firm, alleging that:
Yahoo failed, and continues to fail, to provide adequate protection of its users’ personal and confidential information. Yahoo users’ personal and private information has been repeatedly compromised and remains vulnerable.
In a statement, Yahoo said that it remains "confident in [our] value and we continue to work towards integration with Verizon."
Source: Bloomberg
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