Yahoo paying small price for big hacks

Yahoo is on the verge of cutting the price of its core-business sale to Verizon Communications by $250 million to $350 million, less than a 10 percent discount to what was originally agreed, according to media reports. That would be a small price to pay for massive hacks that affected over 1 billion users’ account data reports Reuters.

In an effort to add online value to its increasingly commoditized telecommunications business, Verizon acquired onetime internet darling AOL and last July agreed to buy $40 billion internet company‘s advertising and search businesses for $4.8 billion. That left Mayer, who will be stepping down from the board of the re-branded Altaba once the deal closes, with little to worry about except huge stakes in Chinese e-commerce behemoth Alibaba and Yahoo Japan.

Things soon started unraveling with the muddled disclosure of a Yahoo security breach dating back to 2014 in which information for at least 500 million accounts was compromised. Then the company revealed another earlier hack possibly affecting over 1 billion users.

For now, the reputational hit of serious and initially undetected flaws in Yahoo’s security is being valued, in round numbers, at 25 cents per affected customer. Yahoo reported about $5 billion of revenue last year for its more than 1 billion users. On a simple calculation, the deal-price discount only covers the loss of one in 20 of them for one year. That seems a light penalty.

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