21 Sep Trust Incident Yahoo
Case Author
Claude 3.5 Sonnet, Anthropic, ChatGPT o1 for model constructs and cues, peer-reviewed by DeepThink (R1) based on ChatGPT4, Open AI.
Date Of Creation
15.02.2025
Incident Summary
Yahoo experienced two massive data breaches in 2013-2014, initially disclosed in 2016, affecting 3 billion user accounts worldwide. The breaches compromised user names, email addresses, phone numbers, dates of birth, hashed passwords, and security questions/answers.
Ai Case Flag
AI
Name Of The Affected Entity
Yahoo
Brand Evaluation
5
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Industry
Technology & Social Media
Year Of Incident
2013
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Key Trigger
Discovery and public disclosure in 2016 of two major data breaches from 2013-2014, affecting all Yahoo user accounts
Detailed Description Of What Happened
The incident became public on September 22, 2016, when Yahoo disclosed a 2014 breach affecting 500 million accounts. In December 2016, Yahoo revealed a separate 2013 breach affecting 1 billion accounts. The scale was later revised to 3 billion accounts – every Yahoo account that existed at the time. The breaches compromised user credentials and personal information, leading to a $117.5 million settlement and significant impact on Yahoo sale to Verizon.
Primary Trust Violation Type
Competence-Based
Secondary Trust Violation Type
Integrity-Based
Analytics Ai Failure Type
Privacy
Ai Risk Affected By The Incident
Privacy and Data Protection Risk
Capability Reputation Evaluation
3
Capability Reputation Rationales
Prior to the incident, Yahoo was already struggling with declining market position but maintained large user base. Security practices were later revealed to be below industry standards, with inadequate investment in security infrastructure. Addendum: Despite declining market share, Yahoo maintained a large user base and email infrastructure. However, security practices lagged behind competitors like Google, with outdated encryption and poor breach detection systems.
Character Reputation Evaluation
1
Character Reputation Rationales
Yahoo delayed disclosure (2-3 years) and initial underreporting of affected accounts demonstrated severe ethical failures in transparency and user protection. The company response showed prioritization of corporate interests over user security.
Reputation Financial Damage
The breach resulted in a $350 million reduction in Verizon acquisition price, $117.5 million settlement, significant user exodus, and lasting reputation damage. The incident became a landmark case in data breach implications. Addendum: Stock price dropped 3% post-disclosure.
Severity Of Incident
5
Company Immediate Action
Yahoo initially disclosed a smaller breach, implemented password resets, enhanced security measures, and established a breach response team. However, full disclosure was significantly delayed. Addendum: Yahoo hired external cybersecurity firms post-disclosure.
Response Effectiveness
The response was largely ineffective due to delayed disclosure, incomplete initial reporting, and inadequate compensation for affected users. The incident significantly impacted Yahoo acquisition by Verizon and user trust. Addendum: Delayed action worsened stakeholder trust; users migrated to competitors like Gmail.
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Model L1 Elements Affected By Incident
Reciprocity, Brand, Social Adaptor, Social Protector
Reciprocity Model L2 Cues
Accountability & Liability, Error & Breach Handling
Brand Model L2 Cues
Brand Image & Reputation
Social Adaptor Model L2 Cues
Data Security & Secure Storage, Compliance & Regulatory Features
Social Protector Model L2 Cues
Media Coverage & Press Mentions
Response Strategy Chosen
Reparations & Corrective Action, Apology
Mitigation Strategy
Yahoo response combined technical fixes with delayed acknowledgment and incomplete disclosure. The company eventually offered financial compensation through settlement but faced criticism for inadequate initial response and transparency. Addendum: Yahoo offered free credit monitoring post-settlement.
Model L1 Elements Of Choice For Mitigation
Reciprocity, Social Adaptor
L2 Cues Used For Mitigation
Accountability & Liability, Data Security & Secure Storage
Further References
https://www.reuters.com/article/us-yahoo-cyber-idUSKBN1CF2JR, https://www.sec.gov/news/press-release/2018-71, https://www.ftc.gov/news-events/news/press-releases/2019/04/ftc-approves-settlement-yahoo-now-known-altaba-related-data-breach, https://www.nytimes.com/2017/10/03/technology/yahoo-hack-3-billion-users.html
Curated
1
The Trust Incident Database is a structured repository designed to document and analyze cases where data analytics or AI failures have led to trust breaches.
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