The Strategist

Verizon may refuse to buy Yahoo!

10/14/2016 - 14:59

Verizon may refuse to buy Yahoo! because of the database hack happened in 2014 and the company’s co-operation with US intelligence agencies in the e-mail scanning, reports Reuters referring to the company's General Counsel Craig Silliman.

Mike Mozart
Mike Mozart
At the meeting in the company's headquarters in Washington, Silliman spoke about the need to get a full picture of consequences of the breach, which resulted in stolen information about 500 million users of data.

"I think that we have every reason to believe that the consequences have affected financial position of Yahoo!", - he explained. The hackers’ attacks became public only after conclusion of the agreement between the two companies in summer.

Representative of Yahoo!, in turn, said that the company has no doubt in its value, and continues working to merge with Verizon. However, according to Silliman, if Yahoo! does not consider hacker attack a basis for revision of the transaction, the company must provide evidence in favor of such a position. Yahoo! refused to comment on a question of whether or not negotiations to reduce the cost of the transaction are underway.

"Frankly, we are still finding out what was happening then, and whether it can be considered a significant factor to affect state of affairs", - commented Lowell McAdam, Head of Verizon.

"At this point I think we have enough reason to believe that this fact is essential, and we expect that Yahoo! will show us all the consequences of the incident", - said Silliman.

Recall that in late September, Yahoo! confirmed leakage of 500 million user accounts as a result of a hacker attack in 2014. This is the biggest publicly announced cyber-attack in history. The FBI is investigating the case. Hackers gained access to information about names, email addresses, phone numbers, dates of birth and encrypted passwords, as well as security questions and answers to them to access additional verification. Allegedly, attackers did not steal information about credit cards.

The company believes that only hackers supported by a state would be able to gain access to that amount of private data. The first information about the breach appeared in the summer of 2016, after a hacker posted an offer to sell access to users' accounts.

Yahoo! said it has informed all users whose accounts could potentially be subject to hacking. The company is asking those, who has not changed their passwords in Yahoo! services in 2014, to alter them in order to ensure their security.

In July, mobile operator Verizon agreed to buy Internet giant Yahoo for $ 4.83 billion. In the ordinary course of things, the negotiations would have already been over. However, since then Yahoo has made a resonant statement, confirming information on hacking their security system in 2014, and data leakage of hundreds of millions of its users. Moreover, there was a number of reports that Head of the security department retired in the last year after his involvement in the mass program of the US government surveillance of electronic correspondence users was revealed.

Experts had previously assumed that all these scandals could lead to cancellation or substantially revised deal between Verizon and Yahoo. The merger, according to regulations, is to be completed in early 2017. The agreement states that content, search, and mobile developments of Yahoo are to be united with relevant parts of AOL, so that total number of users is expected to reach 1 billion. This would create a third-largest digital advertising giant after Google and Facebook. It is not clear whether it will happen as expected.