Yahoo will now sell its core business to Verizon at 4.48 billion USD (350 million less the original amount of 4.8) following Yahoo’s disclosure on massive cyber-attacks back in September 2016. While not a deal-breaker as posted earlier, a significant cut to the original price has left Yahoo licking its wounds and sending a message to Kenyan companies that cyber security is a big deal.
It is reported that Verizon will get Yahoo’s Internet business, which includes Yahoo Mail, Flickr, Tumblr and Web properties such as Yahoo Finance and Yahoo Sports, hoping to rival Facebook and Google in digital advertising.
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On 22nd September 2016, Yahoo confirmed a cyber-attack in which over 500 million personal accounts were compromised. This was arguably the largest cyber security breach in history. The information obtained by the hackers includes names, email addresses, telephone numbers, dates of birth and in some cases, security questions and answers. This comes in the wake of the on-going merger with Verizon Communications in which Yahoo is selling its core business (search, email and messenger assets as well as advertising technology tools) for USD 4.8 Billion.
While not as embarrassing to its members as the Ashley Madison hack from 2015, this recent event raises a good prompt to question whether Kenyan law is relevant to the internet. What if Yahoo was a Kenyan company? What would be the legal outcome of this breach?
Kenya’s legislature is attempting to keep up with evolving cyber security issues. Existing law does not impose any sanction or penalty on to the Kenyan equivalent of Yahoo however there are three bills which would change this.
The Data Protection Bill 2013, the Computer and Cyber Crimes Bill 2016 (CCC) and the Cyber Security and Protection Bill 2016 (CSP) are based on the equivalent laws in South Africa and the UK and aim to incentivize companies to increase their internet security and to prohibit certain acts in the use of the internet. It is unclear if, or when, they will become law.
The Data Protection Bill aims to regulate the collection, retrieval, processing, storing, use and disclosure of personal data. The Bill proposes that all companies will be required to put in measures to protect data against loss, destruction and manipulation. Failure to put in adequate security measures will attract a penalty of 100,000 Kenya Shillings or to imprisonment of 2 years or both.
The CSP and the CCC share the same vision of regulating cyber crimes but adopt competing methods to try and deal with this issue. The CCC is a Government Bill whereas the CSP is privately sponsored, so there is currently no clarity on when or if these bills will be progressed.
The CSP aims to establish a Response Unit in the ICT Ministry to receive and investigate reports on cyber threats. The CCC proposes additional investigative procedures for police officers.
The CSP proposes an information sharing mechanism between public and private companies (and with each other) whereas the CCC is seeking to improve international co-operation for prosecuting cyber crimes. Broadly, the goal of both bills is to hasten investigations and prosecution of cyber crimes.
Relevantly for corporations, the CSP would require a company suffering a cyber-breach to report it to the Response Unit within 7 days of it occurring. Failure to do so will be an offence. Worryingly, for corporations, there is no element of knowledge to trigger the 7 day reporting requirement. A company could be in breach of this provision if it were hacked and did not discover this fact for a significant period of time. As mentioned above, the CSP bill does not currently have government support and so its chance of becoming law is not high. However, its existence, and the Government’s CCC bill shows that the Kenyan legislature is moving towards regulating and imposing penalties in this area. It is only a matter of time before one of these bills is enacted.
Separate to the legal outcomes, from a commercial perspective, a cyber-attack is bad for business. Yahoo not only faces potential class action suits, and reputational damage but the likelihood of the hack being a deal breaker on the merger with Verizon is high. With the potential for new legislative penalties in Kenya on the horizon, companies should place data protection and cyber-security on their risk management agenda sooner rather than later and before a cyber-breach occurs, not as a result of one.
Below is a clip on simple cyber security tips we can all embrace from the Herjavec Group a cyber security firm.