Verizon Says Yahoo Privacy Breach Could Impact Deal

In what may be considered confirmation of earlier rumors, Verizon Communications Inc has indicated that recent revelation of a massive data breach at Yahoo may cause it to request renegotiation of the deal it has to buy the Internet company.

The telecoms giant’s legal representative, Craig Siliman, said at a meeting in the company’s offices in Washington on Thursday that it was normal for the deal to be impacted if the data breach is considered of much consequence.

“I think we have a reasonable basis to believe right now that the impact is material and we’re looking to Yahoo to demonstrate to us the full impact,” the Verizon general counsel said. “If they believe that it’s not then they’ll need to show us that.”

Siliman said the US’ largest wireless communications service provider has been reviewing the breach to enable it determine whether it was material to affect the deal.

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In July, Verizon agreed to acquire the core business of Yahoo for $4.8 billion after coming tops in a prolonged auction. The acquisition was scheduled to be wrapped up by the end of March.

But the popular email service provider has made the news for all the wrong reasons in recent weeks. Last month, it revealed for the first time a massive hacking incident that took place in 2014 in which sensitive information, including names, date of births, passwords and security questions, of around 500 million users was stolen.

Yahoo said the hacking incident, which ranks among the largest private data thefts ever, was discovered in July. It said in September that it believed the hackers were state-sponsored, although it did not reveal the country that was responsible.

The Internet company failed to inform Verizon about the breach until September – a decision which expectedly infuriated the carrier. This led to earlier reports that Verizon might request a discount.

Merger agreements often contain provisions that allow buyers to withdraw from agreed deals under certain conditions. The BBC reports that a clause in the agreement with Yahoo allows Verizon to withdraw from the deal if an event is considered reasonably capable of producing “a material adverse effect on the business.”

However, experts in business law say it is difficult to enforce material adverse effect clauses. Courts have at times disallowed their use.

The request by Hexion Specialty Chemical to withdraw from an acquisition deal for Huntsman Corp., following slump in the latter’s earnings, was thrown out by a Delaware court in 2007, according to the Wall Street Journal. But Cerberus was able to walk away from a deal to buy Innkeepers in 2011 and eventually agreed a deal $100 million lower than the initial one.

Verizon CEO Lowell McAdam disclosed earlier this week that the telecoms giant did not intend withdrawing from the deal yet. But he suggested a renegotiation of terms will be needed for the acquisition to be finalized.

The carrier plans to combine Yahoo and AOL, which it acquired last year, to enable it compete for online advertising dollars with heavyweights such as Google and Facebook.

“We are confident in Yahoo’s value and we continue to work towards integration with Verizon,” a spokeswoman for Yahoo said.

Sources told the Wall Street Journal integration planning is still ongoing between the two companies.

FCA Prohibits Payday Lender Director Over Forged Documents

Since 2012, the Financial Conduct Authority (FCA) in the United Kingdom has been on high alert in regards to the nation’s payday loan industry, a multi-billion-dollar business used by all kinds of people.

As part of this heightened awareness, the FCA announced Wednesday that it has prohibited a payday loan lender and its director from operating. The FCA claims the group and its director submitted evidence to the High Court that consist of documents described as a “sham” and “forged.”

Andrew Barry Hart, the owner and director of Wage Payment and Payday Loans Limited (WPPL), will no longer be allowed to work in any part of the regulated financial services industry in the UK. The FCA has ended the organization’s interim permission and has rejected its application for authorization.

The FCA wrote in a Decision Notice that “[Hart] took a reckless approach to managing the affairs of WPPL.” The FCA would go on to allude to a High Court judgment that concluded that Hart “advanced what he knew to be a false case, supported by forged or sham documents which, to his knowledge, contained false information, and he was found to have given untrue evidence.”

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What this means is that the FCA has prohibited Hart based on the allegations that he is neither a fit nor proper person. Because of the paucity of integrity and competence, Hart and WPPL’s interim permission was refused. It also cited that the payday loan provider did not meet the minimum conditions pertaining to resources and suitability.

“There is no place in an FCA-regulated consumer credit market for firms like WPPL or senior managers, like Mr. Hart, who lack the requisite integrity and competence to ensure customers are treated fairly and all relevant regulatory obligations are met,” said Mark Steward, the FCA director of enforcement and market oversight, in a statement.

“We will continue to use our powers to protect consumers and tackle firms who cross the line and senior managers whose failures have caused or contributed to the firm’s failures.”

The interesting part about this case is that this is the very first ban of a payday loan senior manager due to non-compliance since the FCA began to head regulation of consumer credit a couple of years ago.

Since the global financial crisis, the UK has taken a hard line approach to the payday loan industry. The FCA has imposed stringent rules and tough regulations on the payday loan niche, and this has negatively impacted some of the biggest and smallest loan companies in the industry. Reports have suggested that the rules and regulations became so tough that many of them have actually exited the industry altogether.

The government finally acted on numerous complaints made by consumers who have been affected by payday loans. Critics of the alternative financial product argue that payday loan lenders operate in a sort of Wild West, which means they do not have regulations in which to abide by. This, opponents aver, enables stores to charge exorbitant interest rates and excessive charges that are hard to bear.

Softbank, Saudi Arabia Join Forces for $100 Billion Tech Fund

SoftBank Group has announced a partnership with Saudi Arabia to create what will rank among the world’s biggest tech fund, with a target of up to $100 billion.

SoftBank revealed on Friday that it is creating a new fund in partnership with Saudi Arabia and other interested investors to pump $100 billion into highly-promising technology companies across the world in the next five years. The fund is to be managed by a subsidiary of the Japanese telecoms company in the UK.

“With the establishment of the SoftBank Vision Fund, we will be able to step up investments in technology companies globally,” Masayoshi Son, founder and chairman of SoftBank, said. “Over the next decade, the SoftBank Vision Fund will be the biggest investor in the technology sector.”

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Son, the second-richest man in Japan, has successfully built his company from a mere $50,000 startup to a $68 billion telecommunications heavyweight. The SoftBank Vision Fund represents his efforts to extend his investment into more areas as he seeks to become one of the most notable investors in the world.

SoftBank said Saudi Arabia will be the fund’s lead investment partner. The country’s leading sovereign wealth fund the Public Investment Fund (PIF) is expected to invest as much as $45 billion over the coming five years. The Japanese telecom firm will add at least $25 billion to the fund, while other unidentified large investors that have shown interest could raise the total pool up to $100 billion.

If the target pool is achieved, the SoftBank Vision Fund could become the largest in the world. Compare that to the record $129.5 billion investment which CB Insights reports that global venture capital funds made last year.

The Saudis have started shifting more focus into non-oil industries to drive local economy amid low prices in the global oil market. Deputy Crown Prince Mohammed bin Salman is at the forefront of the drive to boost the kingdom’s economy. Among the plans he has announced this year is the expansion of the PIF to around $2 trillion, significantly up from the previous $160 billion.

The Saudi government has become more aggressive in terms of its investments this year, shifting away from a tradition of making low-risk investments. It bought into the popular American ride-hailing company Uber in a $3.5 billion deal in June, signifying its intention to explore the global tech industry.

SoftBank has signaled its interest in becoming a major actor in the future-focused system of Internet of Things (IoT) with the acquisition of British chip maker ARM Holdings Plc for $32 billion in July. The firm’s portfolio already included investments in such companies as American carrier Sprint Corp, Chinese ecommerce giant Alibaba Group Holding Ltd., and Yahoo.

The 59-year-old Son, who had earlier made known his desire to retire in his 60s, brought in Nikesh Arora in 2014, grooming the ex-Google executive to become his successor. Fast forward to two years after, the SoftBank founder doesn’t look ready to retire any time soon.

The person who will head the new tech fund has not yet been revealed. The Japanese telecom company doesn’t want to give much information away yet, saying the Vision Fund had yet to close.

General Motors’ Car Sharing Service Maven Reaches San Francisco

Maven, a car-sharing company owned by General Motors, has announced expansion of its service to San Francisco as it work to roll out in more cities across the U.S.

The announcement was made by the company late Thursday evening. San Francisco becomes the ninth city in the country where the car-sharing service is now available.

The cities where Maven, which launched at the beginning of the year, already maintains a presence include Boston, Chicago, Los Angeles and New York.

But the car-sharing company may find things a bit tough in San Francisco where rivals such as Getaround and Zipcar have already gained some ground, having been around for several years. But it appears to have its plan well set out on how to claw market shares from these popular programs.

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Maven thinks its service would appeal particularly to tech professionals in one of the major technology hubs in the country.

“Maven’s blend of new cars with seamless technology provides a fully connected car sharing experience that brings our members closer to the experiences, places and people they love,” Julia Steyn, the company’s VP of urban mobility, said.

In September, Maven introduced a one-way rental service which allows drivers to pick up a vehicle at location and leave it at another without any need to bother about returning it. The company will hope this can help make it an instant hit in the Bay area, even though Zipcar already offers similar service.

The car-sharing program represents General Motors’ interest in taking advantage of alternative transportation services. The leading American automaker appears to be so much interested cashing in on the millennials and inner-city professionals who wouldn’t want to be encumbered by car ownership.

“Either GM spends money to convince someone who doesn’t want a car to buy a car, or spends it getting into another business,” Maven Chief Operating Officer Dan Grossman said.

GM will benefit from profits made by Maven. This will be in addition to the revenue it gets from sales made to the car-sharing business, which will also pay for gas, maintenance and repair.

The use of cars made by GM may give Maven an upper hand in the San Francisco market. These vehicles offer high-tech features such as SiriusXM radio, Android Auto, Apple CarPlay, and ultra-fast 4G LTE wireless connectivity. Vehicles from some of its rivals, including Getaround, do not offer them.

Maven says customers can reserve any of its 60 highly-sophisticated cars placed in different areas across the city using an app. The vehicles can be unlocked through the use of a smartphone. Hourly rate for renting a car is pegged at $8, which somehow takes its high-tech integrations into consideration.

To date, more than 12,000 reservations have been made with the car-sharing program, according to Grossman.

GM reportedly hopes to use Maven to convince drivers who are reluctant about owning a car to buy one. The electric car Bolt is one of the models that the auto giant is expected to introduce to customers through the car-sharing program.

The American automaker also holds a 9 percent stake in ride-sharing service Lyft. In January, it invested $500 million in the startup.