Yahoo says “state-sponsored” hackers stole data on about 500 million users in what could be the largest publicly disclosed cyber-breach in history.
The breach included swathes of personal information, including names and emails, as well as “unencrypted security questions and answers”.
The hack took place in 2014 but has only now been made public.
In the UK it is believed data on about eight million user accounts was taken in the hack.
Stolen data includes names, email addresses, telephone numbers, dates of birth and encrypted passwords, but not credit card data, Yahoo said.
It said the information was “stolen by what we believe is a state-sponsored actor” but did not say which country it held responsible.
The FBI has confirmed it is investigating the claims.
News of a possible major attack on the technology firm emerged in August when a hacker known as “Peace” was apparently attempting to sell information on 200 million Yahoo accounts.
On Thursday, Yahoo confirmed the breach was far bigger than first thought.
Yahoo is recommending all users should change their passwords if they have not done so since 2014.
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In the UK, ISPs Sky and BT issued warnings for customers that they may be affected by the breach as Yahoo provides email services for both ISPs.
Sky estimates that it had about 2.5 million Sky.com email account holders at the time of the breach. It said not all were affected but would advise everyone with a Sky.com email account to update their password.
BT said it was carrying out its own investigation but advised the “minority” of its customers who use Yahoo mail to change their passwords.