Yahoo Hack Hits Stock and Deal, Too

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By William Vogeler, Esq. on December 16, 2016 8:49 AM

Following Yahoo's announcement on Wednesday that more than 1 billion user accounts had been hacked, the company is facing more external and internal challenges.

Yahoo stocks dropped about 6% on the stock exchange Thursday, adding to the potential effect of the latest email hack on a pending offer to buy the company. Verizon had offered $4.83 billion to buy Yahoo's core business in July, but the company has revealed two historic security breaches since then. Reports have speculated Verizon will seek a billion dollar discount in the purchase price.

Over a Billion Accounts Compromised

In September, Yahoo executives disclosed that 500 million user accounts had been compromised, and this week the company announced another billion accounts were hacked. User names, email addresses, telephone numbers, dates of birth and passwords were stolen. The company's chief information security officer Bob Lord said they may be connected to a foreign government.

"We have connected some of this activity to the same state-sponsored actor believed to be responsible for the data theft the company disclosed on September 22, 2016," he said in a post.

Bank Information Not Disclosed; Government Information Was

Lord said the stolen information did not include passwords in clear text, payment card data, or bank account information. Payment card data and bank account information are not stored in the system the company believes was affected, Yahoo said in a notice to account users. The company released a similar statement after the September attack.

In the meantime, as revealed by a Reuters news report in October, Yahoo secretly scanned and gave up massive account information to the U.S. government last year. Former Yahoo employees said the company scanned hundreds of millions of email accounts for the National Security Agency or FBI.

Under the Foreign Intelligence Surveillance Act, intelligence agencies can require U.S. phone and Internet companies to provide customer data to aid foreign intelligence-gathering efforts for a variety of reasons, including prevention of terrorist attacks. Without admitting it had scanned and provided information to the U.S. government, Yahoo issued a statement that it is "a law abiding company, and complies with the laws of the United States."

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