Yahoo Inc. (YHOO) may have disclosed two massive data breaches potentially impacting millions of consumers, but it’s not likely to be enough to derail Verizon Communication Inc.’s (VZ) $4.85 billion acquisition. The reason: data breaches have become common in corporate America.
That’s according to a report in Bloomberg News, which cited experts and investors as saying Yahoo isn’t alone in getting hacked, and with the short attention spans of Americans, those breaches—even the massive ones—are soon forgotten. (See also: Yahoo Discloses New 1 Billion Account Breach.)
“I tend to not feel like these hacks are that big of a deal in the broader scheme of things,” said Michael Mahoney, senior managing director at Falcon Point Capital, to Bloomberg News. “Obviously they can be damaging. But it doesn’t take too long before people forget about it.”
No Lasting Impact
While infiltrating companies’ computer networks has been a favorite pastime of hackers for years, recently the pace and sophistication of the attacks have increased rapidly. In the last few years Sony (SNE), Target Corp. (TGT), The Home Depot Inc. (HD), JPMorgan Chase & Co. (JPM), Anthem Inc. (ANTM), Cisco Systems Inc. (CSCO) and host of others all suffered high-profile data breaches putting millions of consumers’ identities at risk.
The Identity Theft Resource Center, which Bloomberg cited in its report, pegs the number of data breaches in the U.S. at close to 1,000 this year alone, potentially impacting more than 35 million personal records such as Social Security numbers and bank account information. Many of the companies saw an initial hit to their , but only for a short period of time. Experts told Bloomberg that that will likely be the case with Yahoo, even though the size of the breaches are massive.
Fixing Big Problems
What’s more, experts said the cost of data breaches companies have to incur doesn’t end up bankrupting them with Target shelling out only around $200 million for its breach. In November, Yahoo said the original breach cost it roughly $1 billion in market cap in the third quarter. For Verizon, one of the big sticking points to consummating its deal is the liability cost from lawsuits stemming from the breach. That concern is prompting Verizon to reportedly request a lower price from Yahoo to move forward. (See also: Verizon Wants Concessions on Yahoo.)
Larry Ponemon, founder of the Ponemon Institute told Bloomberg he thinks Yahoo’s costs and loss of opportunity from the breach may be $2 to $3 per customer record, resulting in a $1 billion reduction in its sale price. Meanwhile Mahoney of Falcon Point is betting the sale price will be lowered by 5% to 10%.