All eyes have been on Verizon since news broke last month of a massive data breach that took place at Yahoo in 2014. The hack resulted in the theft of personal data from around 500 million past and present Yahoo account holders, and is believed to be the largest ever hack to be publically disclosed by a company. Both the scale of the theft and the delay in Yahoo’s discovery and disclosure of the incident have raised questions about Yahoo’s internal cybersecurity and accountability mechanisms as well as criticism from political actors.

Material impact

However, suitor Verizon has stayed quiet about the likely impact of Yahoo’s disclosure on the $4.8bn takeover deal between the two companies – until now. In a statement this week, Verizon general counsel Craig Silliman warned that the value of the deal may have been ‘materially affected’ by the breach disclosure: ‘I think we have a reasonable basis right now to believe that the impact is material and we’re looking to Yahoo to demonstrate to us the full impact. If they believe that it’s not then they’ll need to show us that,’ he said.

Renegotiation likely

The $4.8bn agreement, closed in July, carries a clause that allows for Verizon to withdraw from the purchase if an event can be reasonably expected to have an adverse effect on Yahoo’s value. It has been widely noted, however, that a renegotiation of the purchase price is significantly more likely than an outright withdrawal, which would require court approval. It is also interesting that Verizon is pursuing a material impact argument rather than one of misrepresentation as it suggests, as noted by Fortune, that Verizon believes that Yahoo really didn’t learn of the breach until after the deal had closed.

Sources: BBC; Fortune; Washington Post