Yahoo Security Screw-ups Could Cost It $1bn

When you're about to spend big on a product and then you find out that it's damaged or not as described there are two options available to you: cancel the purchase or negotiate the price down to accommodate the reduced value of what you thought you were buying.

Verizon sounds like it's exploring the second route with its purchase of Yahoo.

The news that Yahoo failed to disclose to buyers that it had leaked passwords of half a billion of its users could certainly be considered an impairment of the product. To have that news followed up with the information that Yahoo opened a backdoor for US intelligence agencies to scan its users emails just puts the icing on the cake.

With every sane user currently rushing to close their Yahoo accounts its hard to see how the planned merger with AOL actually benefits Verizon.

The New York Post is reporting that Verizon is asking for a $1bn reduction in the $4.8bn sale price agreed earlier in July. That's probably just a starting point, once the impact of these revelations become clear Verizon may ask for more reductions, or walk away from the deal completely.

It's hard to imagine Yahoo being more of a train wreck that it was at the start of the year, but this is apparently the place it has arrived at. I can't imagine being a large Yahoo shareholder has been much fun for the last eight weeks. Things could get a lot worse yet.


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