The IT Nerd

This isn’t good news if you’re Verizon who now owns Yahoo. I say that because the company has been ordered by a federal judge to face much of a lawsuit in the United States claiming that the personal information of all 3 billion users was compromised in a series of data breaches:

In a decision on Friday night, U.S. District Judge Lucy Koh in San Jose, California rejected a bid by Verizon Communications, which bought Yahoo’s Internet business last June, to dismiss many claims, including for negligence and breach of contract. Koh dismissed some other claims. She had previously denied Yahoo’s bid to dismiss some unfair competition claims.

[…] The plaintiffs amended their complaint after Yahoo last October revealed that the 2013 breach affected all 3 billion users, tripling its earlier estimate. Koh said the amended complaint highlighted the importance of security in the plaintiffs’ decision to use Yahoo. ‘Plaintiffs’ allegations are sufficient to show that they would have behaved differently had defendants disclosed the security weaknesses of the Yahoo Mail System,” Koh wrote. She also said the plaintiffs could try to show that liability limits in Yahoo’s terms of service were “unconscionable,” given the allegations that Yahoo knew its security was deficient but did little.

I’m pretty sure that if you factor in the number of people who were affected by this pwnage and the potential cash that could be extracted from Verizon, this is going to get settled out of court pretty quickly. Because fighting and losing is going to get expensive in a hurry and even Verizon doesn’t have that kind of cash. The question is, how long will that take to happen.

The Canadian behind the Yahoo hack has decided to plead guilty. Karim Baratov served up a guilty plea in court today and he’ll be back to face sentencing on Feb. 20th. But his lawyers have a spin on this:

Outside court Tuesday, Baratov’s attorneys said their client hacked only eight accounts and did not know that he was working for Russian agents connected to the Yahoo breach. Baratov was arrested in Hamilton, Ont., in March and later agreed to forgo an extradition hearing and face the U.S. charges.

“He’s been transparent and forthright with the government since he got here,” said one of his attorneys, Andrew Mancilla.

We’ll see about that. I’m sure US officials see things differently. But seeing as they can’t get the two Russians accused of pwning Yahoo along with Baratov, you can be sure that they’ll throw the book at him early next year.

I wonder where ex-Yahoo CEO Marissa Mayer is right now because I suspect that about three billion people want to know why she didn’t let the world know that every Yahoo account got pwned in that hack on Yahoo a few years back:

Subsequent to Yahoo’s acquisition by Verizon, and during integration, the company recently obtained new intelligence and now believes, following an investigation with the assistance of outside forensic experts, that all Yahoo user accounts were affected by the August 2013 theft. While this is not a new security issue, Yahoo is sending email notifications to the additional affected user accounts. The investigation indicates that the user account information that was stolen did not include passwords in clear text, payment card data, or bank account information. The company is continuing to work closely with law enforcement.

If you still have a Yahoo account, now would be a really good time to follow the instructions on the email that you’re going to get. Or you can close the account seeing as it’s been pwned for years without your knowledge. The choice is yours. While new owners Verizon would prefer that you keep the account. I don’t think you should.

It’s official. Yahoo has been swallowed up by Verizon, and as part of that Marissa Mayer is leaving her post as CEO of what used to be called Yahoo. But is now called Oath which is now run by Tim Armstrong, former chief executive of AOL. Mayer posted a Tumblr post with her thoughts on her departure:

Looking back on my time at Yahoo, we have confronted seemingly insurmountable business challenges, along with many surprise twists and turns. I’ve seen our teams navigate these hurdles and mountains in ways that have not only made Yahoo a better company, but also made all of us far stronger. During these past 5 years, we’ve built products that delight our users, focused on our clients’ businesses, driven substantial value for our shareholders, and endeavored to make Yahoo the absolute best place to work. I want to take a moment to remind you of some of our many achievements together. They are remarkable, and we should all be very proud.

Chances are that she won’t have to look for a job for a little while. I say that because she pocketed $23 million in severance which is not exactly chump change. Nor is the fact that if you factor in her stock holdings in what used to be called Yahoo, she leaves with $236 million according to CNN. Not bad considering what a gong show Yahoo has been over the last few years with failed attempts to make itself relevant again, and getting pwned by hackers multiple times. I wish I could fail like that and get that sort of payday.

So… Yahoo CEO Marissa Mayer has managed to ensure that when the Verizon buyout of Yahoo is finished in June, that’s she’s going to score a ton of cash before being shown the door. How much cash? Here’s what The New York Times has to say:

Her Yahoo stock, stock options and restricted stock units are worth a total of $186 million, based on Monday’s stock price of $48.15, according to data filed on Monday in the documents sent to shareholders about the Verizon deal.

Oh… But it gets better…. Depending on your point of view of course:

That compensation, which will be fully vested at the time of the shareholder vote, does not include her salary and bonuses over the past five years, or the value of other stock that Ms. Mayer has already sold. All told, her time at Yahoo will have netted her well over $200 million, according to calculations based on company filings.

All together now… Whiskey Tango Foxtrot? This is a woman who has presided over one of the biggest epic fails in American corporate history. And that was before Yahoo got hacked multiple times. How she manages to walk away with this much money is mind boggling. And it beats the millions that Mark Hurd was given to quit his job as CEO of HP after allegations of either sexual harassment or an “inappropriate relationship” with an HP employee that was tied to inaccurate expense reporting that likely covered up the former surfaced.

If I had Yahoo stock, I’d be royally pissed right about now.

According to a report by Bloomberg, four people have been identified in connection with the hacks of Yahoo. Three are Russian. One, in a moment of national shame for me, is apparently Canadian and he or she is under arrest:

U.S. officials are planning to unseal charges against four people, including two linked to the Russian intelligence service, related to the hacking attacks against Yahoo! Inc., according to a person briefed on the matter.

The Justice Department is accusing them of participating in massive online security breaches that compromised hundreds of millions of user accounts, said the person, who asked not to be identified because it was a sensitive legal matter. The hacks came to light last year and threatened to derail the sale of Yahoo’s web operations to Verizon Communications Inc.

One of the people was arrested in Canada Tuesday and was scheduled to appear in court Wednesday for an extradition hearing, according an officer with the court in Hamilton, near Toronto. Additional details weren’t immediately. Three of the suspects are believed to be in Russia, according to the person. Representatives of Sunnyvale, California-based Yahoo and the Justice Department declined to comment.

So this case has taken an interesting turn as it looks like these hacks were state sponsored. That’s going to be a concern going forward as it is now clear that whether you’re a government or a corporation, you have to consider those actors as well as the 12 year old living in their mother’s basement.

UPDATE: There are many more details on this story now coming to light which make for a very interesting read. For that, I would direct you to this story. Also of note, Marissa Mayer who is the CEO of Yahoo who was clearly asleep at the switch when these hacks occurred had this to say on Twitter:

Very grateful to the FBI & DOJ for bringing to justice the Russian officials & hackers who led the attack on Yahoo.https://t.co/AQ4qHpPv6C

— marissamayer (@marissamayer) March 15, 2017

I clearly am in the wrong business because upon Verizon’s completion of its acquisition of Yahoo’s core internet assets, Marissa Mayer who is Yahoo’s CEO will score a $23 million dollar payday  according to a filing with the Securities and Exchange Commission. If that’s not mind blowing enough, the same documents indicates that Yahoo Chief Financial Officer Ken Goldman is set to get $9.5 million in severance too. Both are expected to leave their roles once the deal goes through.

You have to wonder how someone like Mayer who among other things has allowed Yahoo to get hacked multiple times by hackers on her watch deserves that sort of payday. Not to mention that she also failed miserably to make Yahoo relevant again which led to this sale. Last time I checked, you shouldn’t be rewarded for failure. But clearly, the business world doesn’t work that way.

You might recall Yahoo revealed that they were hacked in December which was the latest in a string of attacks. That has a cost and today it was revealed that Yahoo CEO Marissa Mayer is giving yahoo employees her annual bonus to make up for the massive hacks:

As those who follow Yahoo know, in late 2014, we were the victim of a state-sponsored attack and reported it to law enforcement as well as to the 26 users that we understood were impacted. When I learned in September 2016 that a large number of our user database files had been stolen, I worked with the team to disclose the incident to users, regulators, and government agencies. However, I am the CEO of the company and since this incident happened during my tenure, I have agreed to forgo my annual bonus and my annual equity grant this year and have expressed my desire that my bonus be redistributed to our company’s hardworking employees, who contributed so much to Yahoo’s success in 2016.

Great optics. But it’s really meaningless as she’s failed so spectacularly in her role as CEO. I seriously doubt that this was her idea. Hopefully whomever is going to be responsible for this mess at Verizon does a better job than her.

The news is out this morning that Verizon’s purchase of horribly insecure Yahoo is going ahead. But with a $350 million discount due to the latter’s inability to not get pwned by hackers:

Under the amended deal, Yahoo will be responsible for 50 per cent of any cash liabilities incurred following the closing related to government investigations and lawsuits related to the breaches. Liabilities arising from shareholder lawsuits and SEC investigations will continue to be the responsibility of Yahoo.

“The amended terms of the agreement provide a fair and favourable outcome for shareholders,” said Marni Walden, Verizon executive vice-president and president of product innovation and new businesses. “It provides protections for both sides and delivers a clear path to close the transaction in the second quarter.”

The security breaches raised concerns that people might decrease their usage of Yahoo e-mail and other digital services that Verizon is buying. A smaller audience makes Yahoo’s services less valuable because it reduces the opportunities to show ads – the main reason that Verizon struck the deal seven months ago.

You have to wonder why Verizon would even bother with this seeing as these breaches, one of which was as recent as last week, keep happening. There must really be something that Yahoo has that Verizon really wants as I would have pulled the plug on this mess ages ago. But Verizon doesn’t see things that way. And that’s why we’re here. It will be interesting to see if anything else happens that encourages Verizon to finally walk away from the deal.