Yahoo’s second massive hack of its systems, this time affecting 1 billion customers, is prompting Verizon Communications to demand concessions, or it will walk away from its deal to buy its core assets for $4.85 billion.
According to a report by Fortune, which cited people familiar with the matter, Verizon wants Yahoo to lower the price tag and amend the terms of the deal to reflect the economic hits from the hacks. What’s more, Verizon still wants the deal to go through but won’t move unless there are big concerns. Verizon, according to Fortune, has even gone as far as to threaten court action to get out of the deal if it doesn’t get a better price for Yahoo’s core assets. While Yahoo may balk at lowering the price tag, Fortune reported one concession that Yahoo could offer is agreeing to compensate Verizon after the deal closes based on any liabilities that crop up because of the data breaches. They could also hold off on closing the deal to see the impact.
Meanwhile, The Wall Street Journal reported that the latest breach disclosure is much more serious than the one revealed in September because, this time around, Yahoo is asking some customers to reset their passwords. Experts told WSJ that, when customers have to reset their password, some will jump ship and never come back. That, in turn, could prompt Verizon to reprice the deal if there are a lot of customer defections.
With the deal up in the air, Fortune also reported speculation is starting to swirl as to which other companies Verizon can buy to build up its online advertising business, which it’s creating thanks to its purchase of AOL last year. Yahoo was expected to be the complimentary piece for that strategy. With few targets for Verizon to pursue, Fortune reported Pandora Media, Yelp and Twitter could be potential buys, although none of the three will give Verizon the advertising might that Yahoo would bring.