Belfast Telegraph

Data breach may cost tech giant Yahoo a billion dollars

By Adrian Weckler

How much does a data breach really cost? For Yahoo, it could be €1bn (£900m). The company is in deeper trouble than some of its worst critics could have foreseen.

It has suffered the biggest known data breach in history. It has been outed as an apparently willing accomplice ready to spy on its email users for the US government. And it may soon be on the receiving end of a regulatory kicking by EU data authorities that could water down its €4.4bn (£4bn) sale price to Verizon.

But do you even know what Yahoo, which is headed by Marissa Mayer does? Be honest: aside from email, could you name three things Yahoo is engaged in?

If not, here's a quick reminder about what Yahoo is, how it makes money and why it is in so much trouble.

Believe it or not, Yahoo is still one of the top 10 websites visited every day around the world.

Many financial analysts now regard Yahoo primarily as an equity-holding unit.

This is because the most valuable parts of its business, by far, are its shareholdings in Chinese ecommerce Goliath Alibaba and Yahoo Japan (a joint venture between it and Japanese firm Softbank). The Alibaba stake is worth around €30bn (£27bn) (from an investment of under €1bn in 2005), while the Yahoo Japan shareholding is worth just under €10bn (£9bn). Compare this to the sum of €4.4bn (£4bn) being paid by Verizon for all of the active 'core' parts of Yahoo's business and you get an idea of what's what in Yahoo's hierarchy of value.

Yahoo has a recently refurbished building beside the Point Depot in Dublin's north docklands. There, it houses around 300 people who work in finance, HR and support roles. Last year, the company had talked about possibly taking staff numbers up to 450 people. But recent events may cause the firm to alter course.

The recent data breach, where Yahoo admitted that "at least" 500 million email accounts had been compromised, has sparked the interest of US and EU data authorities. But as embarrassing as that may turn out to be, it may be nothing compared to possible sanctions arising from its other current problem.

If reports that Yahoo co-operated in an email-snooping exercise at the behest of US spy authorities are substantiated, the company is facing some very serious repercussions in Ireland and Europe.

Both the Irish data protection commissioner and EU courts have made clear that mass surveillance by US authorities on European personal data could carry penalties up to and including a block on data transfers into the US.

Reports in the US suggest that Verizon, which is currently in the process of buying Yahoo's core internet assets for €4.4bn (£4bn), wants €1bn (£900m) knocked off the €4.4bn (£4bn) purchase price.

So we may now have an answer to the question: how much does a data breach actually cost? In Yahoo's case, it could be €1bn (£900m).

Belfast Telegraph