Another Ya­hoo breach rat­tles in­vestors

Kuwait Times - - TECHNOLOGY -

NEW YORK: Ya­hoo shares slid yes­ter­day on wor­ries that Ver­i­zon will walk away or slash its $4.8 bil­lion of­fer for the com­pany’s dig­i­tal op­er­a­tions af­ter another mas­sive data breach. Ya­hoo re­vealed on Wed­nes­day that in­for­ma­tion was stolen from more than 1 bil­lion user ac­counts in 2013 af­ter dis­clos­ing a separate hack in 2014 of some 500 mil­lion ac­counts in Septem­ber. Ver­i­zon had said it would reeval­u­ate the Ya­hoo deal af­ter the first hack, and said the same Wed­nes­day af­ter the lat­est rev­e­la­tion. Ver­i­zon spokesman Bob Varet­toni on Thurs­day de­clined to com­ment be­yond the com­pany’s Wed­nes­day-night state­ment. Ya­hoo said in a state­ment it was con­fi­dent in its value and con­tin­u­ing to work on its in­te­gra­tion with Ver­i­zon.

The deal was ex­pected to close by March 2017. If the hacks drive Ya­hoo’s users away, the com­pany wouldn’t be as valu­able to the tele­com gi­ant in its quest to build a dig­i­tal-ad busi­ness that could ri­val in­dus­try giants Google and Face­book. Ya­hoo has said that the Septem­ber an­nounce­ment of the 2014 hack didn’t hurt traf­fic to its ser­vices. The sec­ond hack “clearly ups the ante” that Ver­i­zon may try to aban­don the Ya­hoo pur­chase or lower its price, said CFRA Re­search an­a­lyst Scott Kessler.

But if Ya­hoo doesn’t agree, Ver­i­zon might not have the le­gal grounds to do so un­der the terms of its deal, he said. There would have to be sig­nif­i­cant dam­age to the value of Ya­hoo’s busi­ness, like if it caused many users to de­ac­ti­vate their ac­counts, and that’s not yet clear, he said. “If you’re look­ing to buy a house and en­ter into a contract, and then you find some­thing out that makes you want to re­duce your of­fer, that’s not nec­es­sar­ily as easy to do as it is to say,” he said. “Every­one wants a bet­ter deal. Whether or not it’s legally sup­ported or pos­si­ble I think is still un­clear.”

If Ya­hoo and Ver­i­zon can’t agree on whether to end the deal or lower its price, there would be a court bat­tle, said Craig New­man, a lawyer with Pat­ter­son Belk­nap who spe­cial­izes in cy­ber­se­cu­rity. That has risks for both sides. A case like Ver­i­zon’s his­tor­i­cally has been dif­fi­cult to win, he said, but a trial could also mean a lot of pointed, em­bar­rass­ing ques­tions for Ya­hoo about “who was watch­ing the store” on data se­cu­rity. Ya­hoo shares fell $2.23, or 5.5 per­cent, to $38.68 in af­ter­noon trad­ing. Ver­i­zon shares rose 21 cents to $51.84.— AP

CAL­I­FOR­NIA: A cy­clist rides past a Ya­hoo sign at the com­pany’s head­quar­ters in Sun­ny­vale, Calif. — AP

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