Data breaches could cost Yahoo up to $350M USD, Reuters says

Yahoo Inc.’s data breaches now have a price tag on them.

Citing sources familiar with the matter, Reuters and Bloomberg are reporting that Verizon Communications Inc. now plans to buy the former Internet giant for up to $350 million (all figures USD) less than the $4.8 billion it originally promised, thanks to the two high-profile data leaks Yahoo suffered last year.

That’s actually a lower number than the 10 per cent price cut some analysts anticipated when Bloomberg investigated the situation in late December.

“It looks like they’re going to get a price cut – but it’s not dramatic,” Gabelli & Co. analyst Brett Harriss told Bloomberg, whose sources estimated a decrease of $250 million USD.

According to Bloomberg and Reuters’ sources, the $250 million – $350 million figure represents a breakthrough for both Verizon, which had been trying to persuade Yahoo to amend the acquisition’s terms since the attacks became public last year, and Yahoo itself, which could see Verizon share liability in any future breach-related lawsuits. However, the sources also cautioned that the agreement hasn’t been finalized and that it could be days or weeks before one is announced.

Both companies either declined or did not respond to Bloomberg and Reuters’ requests for comment.

As for why the two data breaches – the first, in September, resulted in 500 million email addresses being leaked, a record broken by Yahoo itself when it was revealed that one billion accounts had been leaked in December – didn’t cost the apparently beleaguered search icon more than they did, the most likely answer may lie with what analysts told Bloomberg in December: we’re getting used to them.

As Bloomberg reporter Olga Kharif noted, Yahoo joined a long line of high-profile breach victims last year, including Sony Corp., Target Corp., Home Depot Inc., JPMorgan Chase & Co., EBay Inc., and Toronto-based dating website Ashley Madison.

Nor do stolen names and account information have the impact you might think, Kharif wrote in December, noting that Target and Home Depot lost around $200 million each once insurance was taken into account – a paltry amount for companies of their size.

It’s unlikely that Verizon is interested in Yahoo’s search engine and email services anyway: the company’s true value lies in its apps, mobile ad technology, patent library, and considerable readership, Constellation Research founder and principal analyst R. “Ray” Wang told last year.

“Look, anybody who has a Yahoo Mail account is probably over the age of 40,” Wang said at the time. “But they’re actually a pretty loyal group, and they also have more disposable income.”

As of Feb. 13, marketing analyst Craig Smith estimated that Yahoo’s network of websites had more than 800 million unique visitors across desktop and mobile devices.

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Eric Emin Wood
Eric Emin Wood
Former editor of turned consultant with public relations firm Porter Novelli. When not writing for the tech industry enjoys photography, movies, travelling, the Oxford comma, and will talk your ear off about animation if you give him an opening.

Featured Story

How the CTO can Maintain Cloud Momentum Across the Enterprise

Embracing cloud is easy for some individuals. But embedding widespread cloud adoption at the enterprise level is...

Related Tech News

Get ITBusiness Delivered

Our experienced team of journalists brings you engaging content targeted to IT professionals and line-of-business executives delivered directly to your inbox.

Featured Tech Jobs