Is Post-Hack Yahoo’s Verizon Deal DOA?
Yahoo is in the process of being sold to Verizon for almost $5 billion, but Wednesday’s revelations about 1 billion hacked accounts could put the deal in jeopardy, according to one expert.
It was revealed Wednesday that over 1 billion Yahoo accounts have been hacked, which is not good news for a company that had 500 million accounts hacked in 2014 and in the midst of negotiating a $4.8 billion sale to Verizon.
This is the biggest known hack of user data ever, Wired noted, and it’s a completely separate hack of data from the 2014 incident. Consider the fact that there are only 3 billion internet users on the planet.
“The stolen user account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (using MD5) and, in some cases, encrypted or unencrypted security questions and answers,” the company said in a statement.
When news came Yahoo was hacked in 2014, Verizon indicated that the cost of the sale may be renegotiated, and it seems likely the newly revealed hack could make that possible renegotiation an even bigger issue. Hermant Bhargava, a professor in technology management at the University of California, Davis who has been following the deal, said the purchase may be dead in the water.
“The short answer is there will be a very serious rethink of the deal. That would mean either a price reduction on the deal or really, more likely, pulling out of it,” Bhargava said. “The way I think of it, Verizon bought Yahoo because they needed landing pages. They have subscribers, they want to do video advertising, and they wanted a place where people go. So Yahoo is the place where they could earn revenue through advertising.”
However, Bhargava said, many Yahoo users may start cancelling accounts at this point. He doesn’t believe Yahoo is getting many new users, so these would be users who have had accounts for some time.
“My suspicion is that the value per user account is already falling substantially between the two breaches, and Yahoo’s credibility is really low,” he said.
There are other options for Verizon. Though Yahoo is the sixth most popular website in the world, Verizon could benefit by buying multiple less trafficked websites that are more stable and have a growing following.
Bhargava said Verizon could pick up website like Twitter, Reddit or any number of other websites that younger people flock to that could earn the company a lot of ad revenue. Maybe they’ll throw BuzzFeed or Vice in there too.
If Verizon decides to go ahead with their purchase of the massive web portal anyway, Bhargava believes the purchasing price will be much smaller.
“The biggest concern [for Verizon] would be any liabilities from these breaches,” he said. “If at all there is a deal… it would be a deal minus any liability from these breaches.”
The deal may be dead, or Verizon may be acquiring Yahoo for a billion or two less than it expected to. Whatever happens, try to remember to secure your email accounts—because massive hacks have been in the news a little too often lately. Maybe companies like Yahoo should consider investing a little money into built-in encryption, too, no matter who winds up owning them.