Telecommunications giant Verizon reached a settlement with Yahoo last year to buy the latter for $4.8 billion. However, following the media company’s bad history with cyber attacks, Verizon has demanded to pay less than what they agreed to in the first place.
Online sources point out to Verizon asking for a $300 million discount. Both parties would then end up with a share of responsibility for the accounts compromised by cyber attacks, but shareholders would have to approve of this change first.
Last year, a data breach exposed more than a 500,000 user accounts from Yahoo users. The problem worsened when Yahoo learned about a separate breach from 2014 that affected one billion accounts, the largest data hacking in history.
Yahoo struggles to maintain its position as a valuable asset
Following the data breach, many are surprised by the fact that Verizon would go through with the Yahoo agreement. Both companies have stated their intent to keep going with the merger, which might conclude in late 2017.
The $350 million price cut, according to news outlets, is nothing definitive. Both Yahoo and Verizon will have to go through a series of revisions before they reach a final decision.
Both data breaches signified a huge blow for the legacy Internet company, which has been on the market for more than 23 years. Upon news of the renegotiation, Yahoo’s stock went up by 2%, while Verizon’s dropped 0.7%.
Why does Verizon want to buy a disgraced company?
For many people, it is hard to understand why the telecom giant would want purchase a company disgraced by so many scandals. Yahoo has lost its reliability and still struggles to garner new users for its email service and other features.
Contrary to the current popular belief, Verizon stated that purchasing Yahoo would increase its customer base. In a 2016 interview with the Wall Street Journal, executive Marni Walden said that the deal made a lot of sense for them.
She explained that Verizon, which currently owns the Yahoo-like AOL service, would most likely benefit from buying the purple logo company. She remarked that Yahoo Mail, Yahoo Sports, and Yahoo Finance still garnered significant traffic.
Verizon’s purchase might signify a massive redesign which could bring users back in. Many online experts agree that, before getting into this matter, security should be the telecom giant’s first concern.
As a side note, most outlets have failed to mention it, but Yahoo also owns the popular social network and blogging community Tumblr and the photo-sharing service Flickr.
Both companies together sum an estimated total of 100 million users that Verizon will now cater to directly, gaining unprecedented exposure for future advertising efforts, and also harnessing the revenue provided by these platforms.
In conclusion, Yahoo spent 23 years building a solid infrastructure that gathered millions of users regardless the bad press. In fact, the scandals gave Verizon a valid reason to buy cheap.
Source: The New York Times