Will Yahoo’s massive hack affect its $4.8B deal with Verizon?

Verizon executives are divided over how to proceed with the Yahoo acquisition, according to press reports. Verizon announced in July that it would buy Yahoo’s online business for $4.8 billion, but now the deal is complicated by Yahoo’s announcement that 500 million user accounts were compromised in 2014.

The Yahoo hack is the largest known large-scale data breach in history. It occurred two years ago, but the early online company didn’t notify Verizon until last week – a few days before the public and two months after Verizon announced the $4.8 billion deal. As expected, Verizon executives are angry. “Verizon is livid they were not informed during due diligence and infighting … is impacting the Yahoo deal and this could be the escape clause,” an unnamed source told the New York Post.

The Post and Investopedia report speculation that Verizon sees an opportunity to renege on the deal, and target a younger web company like Twitter. Experts aren’t convinced Verizon could prove material adverse change in court. Verizon and Yahoo have been quiet on the issue.

Regardless of the impact on the Verizon acquisition, Yahoo’s failure to disclose the data breach for two years is deeply troubling. “Data breaches on the scale of Yahoo are the security equivalent of ecological disasters,” said Matt Blaze, a security researcher at the University of Pennsylvania.

Links:

Report: Verizon Execs Divided Over Yahoo (Investopedia, Sept. 26, 2016)

Yahoo hack may send Verizon running from potential merger (New York Post, Sept. 26, 2016)

Verizon to buy Yahoo for $4.8 billion (Speed Matters, July 25, 2016)

Yahoo hack is ‘like an ecological disaster’ (Associate Press, Sept. 27, 2016)