Report: Verizon using Yahoo hacking to ask for $1 billion price concession

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Earlier this year, Verizon agreed to buy most of the assets of Yahoo, including the Yahoo brand. The purchase price was nearly $5 billion; however, that was before the revelation of two massive hacking episodes.

The first data breach took place in 2014 and was said to impact more than 500 million accounts globally. It was revealed in October. Yesterday, news of a new breach came out. That one happened in 2013, and reportedly, one billion accounts were impacted. Yahoo previously said that the hacking was state-sponsored or conducted by state-affiliated entities (e.g., Russia).

Prior to yesterday’s revelation, Verizon was seeking to negotiate a massive ($1 billion) discount off the originally agreed purchase price. Now it may be asking for more than a billion.

A developing Bloomberg story says that Verizon is seeking a $1 billion discount — or a potential exit from the deal.

Yahoo is in a tough spot. They don’t want to make too many price concessions to Verizon because shareholders will be angered (and potentially sue). However, Verizon has most of the leverage and will absolutely require some discount as a condition of going forward.

One of the key assets of the deal is the Yahoo brand, which has been damaged by the two hacking episodes. Yet if the deal were to fall through and Yahoo were forced again to exist as a stand-alone company, its downward revenue trajectory would likely accelerate.

About The Author

Greg Sterling

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association. Follow him on Twitter or find him at Google+.