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Verizon could shave up to $350 million off its Yahoo deal and shift liability for future breaches

It’s a victory of sorts for the much-troubled internet giant.

President and CEO of Yahoo! Marissa Mayer speaks onstage at Glamour Women Of The Year 2016 LIVE Summit
Yahoo CEO Marissa Mayer will preside over the bumpy end of Yahoo
Matt Winkelmeyer / Getty Images for Glamour

According to sources close to the situation, the price for the Yahoo deal could total up to $350 million lower than the $4.8 billion that Verizon originally was going to pay for the internet giant. The figure is smaller than some investors had expected, but also includes terms that stipulate that the company left over from the Yahoo deal, called Altaba, will assume much of the future liability for security breaches that might still be discovered.

Earlier today, in fact, Yahoo warned some users of a breach it had previously disclosed in late 2016 (this is different from another in 2013 and another in 2014), noting that it was a “forged cookie” attack. Forged cookies allow access to some user information without passwords having to be re-entered.

The new breach warning today caused some to make funny cracks at Yahoo’s expense, like this one:

It was extensive hacking, first reported by Recode late last year, that caused a snag in the closing of the deal for the telco giant to buy Yahoo. Since then, more serious security issues have been disclosed. It was yet another bump in the rocky road for the company, which had failed in yet another turnaround attempt, this time by CEO Marissa Mayer.

The sale to Verizon, after an auction among several possible buyers, was considered a victory of sorts. But it has been tarnished by news of serious breaches of Yahoo’s user data, including birth dates and passwords.

The hacks, which occurred during Mayer’s tenure, have already set off a round of lawsuits, as well as several government investigations.

After the first breach was revealed, sources said Verizon was going forgo any price reduction. But as evidence has mounted that Yahoo was even more compromised than originally thought, some had thought Verizon would demand up to $1 billion in a discount or even dump the deal altogether.

So any price reduction under that is a good deal for Yahoo. Bloomberg reported earlier today that the price cut for the Yahoo deal could be as low as $250 million. But other sources said Verizon was pressing for a higher amount that is likely to settle between $300 million and $350 million.

Sources said the deal is now likely to close by April, the time frame Yahoo had announced recently. Certain integration plans with Verizon’s AOL unit are already being planned. Verizon bought AOL for $4.4 billion in 2015.

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