Verizon’s enthusiasm for Yahoo cools in the wake of latest breach

An internal legal team is reportedly looking at how to renegotiate or kill Verizon's pending acquisition of Yahoo.

After yet another data breach, Verizon is reportedly looking to renegotiate or kill its $4.83 billion acquisition of Yahoo.

Citing a person familiar with the matter, Bloomberg reported an internal Verizon team is reviewing the breach, as well as the resulting damage and the company’s options – including protection from any future fallout.

In a statement on December 14, Yahoo CISO Bob Lord said the company identified data security issues concerning more than one billion user accounts.

That’s in addition to a breach Yahoo reported in September that included 500 million accounts.

Yahoo said the stolen user information may have included names, email addresses, telephone numbers, dates of birth, passwords and encrypted and unencrypted security questions and answers.

According to Bloomberg, the hack also included more than 150,000 government employees. This, in turn, puts additional pressure on Verizon to assess its options – and placate shareholders who may be less enthusiastic about Yahoo now, Bloomberg said.

Verizon announced the Yahoo deal in July, saying it would create a new rival in mobile media technology reaching over 1 billion users with “an unrivaled roster of the world’s most beloved brands” – and as part of a bid to become one of the top global mobile media companies after its acquisition of AOL in 2015.

Industry sources consulted by The Drum, however, noted the cost of buying and integrating Yahoo with AOL – a move once expected to make Verizon a more serious competitor to Facebook and Google in media spend – could prove prohibitive.

Ashley Swartz, CEO of advertising platform Furious Corp., said, “With the continuous announcements about the data breaches taking place, they’d be buying a liability, as opposed to an asset [and] it could be argued that it would cost more than its worth.”

This year, according to market research company eMarketer, Yahoo will capture $2.98 billion in total digital ad revenue worldwide, or 1.5% of the digital ad market. That’s compared to Verizon, which netted $1.41bn in digital ad revenue worldwide this year, or roughly 0.7% of the global ad market.

In 2017, Yahoo's net global digital ad revenue is expected to grow to $3 billion, but its market share is expected to drop to 1.3%.

News of the breach also comes as regulators on both side of the Atlantic are increasingly bearing down on data privacy.

Per the IAB, leaked privacy proposals from the European Commission have prompted fears it could inadvertently ruin publishers’ business models.

And in the US, the Federal Communications Commission is reportedly looking to implement laws requiring telecom companies to gain explicit consent from consumers before they can collect information about their usage profiles and behaviors and make them available to third parties.

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