The massive hack Yahoo disclosed last week is a headache for Verizon, the telecom giant set to take ownership of the company early next year.
Rival AT&T should be nervous too.
That's because many AT&T customers get the option to use -- yep, you guessed it -- a Yahoo Mail account to manage services like home broadband, wireless and pay-television services.
It's the outgrowth of a partnership formed 15 years ago between Yahoo and AT&T (then called SBC Communications), bringing AT&T broadband customers to Yahoo's search engine and media services, including Yahoo Mail. At the time, industry watchers hailed the deal as a landmark partnership that would better combat the growing power of AOL and Microsoft's MSN portal.
Today, AOL is part of Verizon, Microsoft's MSN is no more and AT&T likely isn't feeling so great about the deal.
The Yahoo hack compromised at least half a billion accounts containing user names, email addresses and passwords. That makes it the biggest hack ever. US Sen. Mark Warner has asked the Securities and Exchange Commission to investigate.
The hack puts AT&T in an uncomfortable position. The company is still waiting for data from Yahoo on the specific customers who may have been affected, according to a person familiar with their dealings.
"We began investigating immediately and requested information from Yahoo necessary to determine which email accounts may have been compromised," the company said in a statement. "In the meantime, we are in the process of notifying potentially affected customers."
Yahoo has been notifying users who may have been affected about what it's doing to protect them and what steps they can take to secure their accounts, according to a source close to the company.
Chances are, a significant number of AT&T customers are affected. While AT&T wasn't the only company to strike a cross-selling partnership with Yahoo -- Verizon did it a few years later -- it was the first to do so.
AT&T was actually in the middle of breaking up with Yahoo before the attack, having announced in May that it had instead tapped Synacor to handle its internet and mobile portal business.
The decision to ax the deal, worth an estimated $100 million a year to Yahoo, had come as chatter was growing over potential suitors. AT&T was among the rumored bidders for Yahoo, but Verizon snagged the internet pioneer in July with a $4.8 billion deal.
For now, AT&T is offering little advice to its customers beyond the standard line: regularly change your passwords.
That, along with these tips, is advice everyone should heed.
First published at 5:00 a.m. PT.
Update 11:49 a.m. PT: Added information on Yahoo's notifications to users.