Verizon & Yahoo Close to Revised Deal Despite Data Breaches

Verizon & Yahoo Close to Revised Deal Despite Data Breaches

Verizon Communications Inc. is close to agreeing a revised deal with Yahoo! Inc. that would reduce the $4.8 billion price tag it previously agreed to pay for Yahoo’s internet business by up to $300 million.

The deal appeared to be in doubt last year when Yahoo issued two disclosures about massive user-data breaches - after Verizon had already agreed the original takeover deal. Verizon executives had spoken publicly about the breaches and whether they would have an effect on the company's deal.

According to The New York Times, the new deal will see the two companies sharing legal responsibility and costs for the data breaches. Quoting a person with knowledge of the matter, they say the deal is expected to be announced within days.

In September, Yahoo revealed hackers had stolen the data, including encrypted passwords, of 500 million customer accounts in 2014. They announced an even larger breach in December, involving a billion accounts, which had occurred in 2013. Hackers had siphoned information including users’ email addresses, scrambled account passwords and dates of birth. Yahoo forced all of the affected users to change their passwords. But just this week, the company notified some of its users that it had found evidence of attempts to log in to their accounts without a password.

Despite this, Yahoo said last month that it was confident its deal with Verizon would close by the end of June.

Verizon, the telecommunications giant based in New York, has been trying to build up its digital media business. Its core business is its wireless phone service, but it’s struggling to keep up with rivals AT&T, T-Mobile and Sprint. Verizon is buying Yahoo for its billion users as it tries to expand into mobile media and advertising ventures.

Search ads, display ads, and SMS advertising are the prominent mobile marketing strategies that are used by most businesses. The growing adoption of mobile devices is aiding the demand for mobile ads globally, with the market forecast to grow at a CAGR of 14.6% during the period 2016-2020. Under the deal, Verizon will acquire Yahoo’s popular search engine and email service.

Analysts say Verizon have plenty of reasons to complete the transaction quickly. One of the most prominent being that archrival AT&T is also looking to branch out into media and advertising. They are currently negotiating the purchase of Time Warner for $85 billion.

Yahoo will be hoping to complete the deal as soon as possible. While waiting for the terms to be finalized, Yahoo has continued to lose market share in digital advertising to the likes of Facebook, Google and Snapchat. They have also been forced into restructuring and cost cutting measures, which saw them cut more than 2,000 jobs in 2016.  

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