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From Newsweek

Merging E-Mail and Social Networking, Yahoo Tries to Avoid Google's Mistakes

In February, Yahoo got to watch with schadenfreude as Google drove its new Buzz social network straight over a cliff with inadequate privacy controls. Now Yahoo has decided it wants to head for pretty much the same cliff, just with a slightly firmer grip on the wheel.

Yahoo is beefing up its Yahoo Updates service, a relatively unknown social network that allows users to post status updates, photos, and other content by integrating it directly into Yahoo Mail. The numbers make a compelling case: Yahoo Mail has some 280 million users, so if the Sunnyvale, Calif., company can flip a switch and create a social network around that—why, it'd be a sudden player against Facebook, a global force at nearly 500 million users, and Twitter, at 75 million.

No doubt that is the same thought that occurred to Google when it introduced Buzz as an add-on to its popular Gmail service. That launch didn't go so well. Yahoo is paying close attention to the litany of mistakes Google made, especially the flaw that allowed some users' lists of frequently e-mailed contacts to go public. The privacy outcry then was swift and loud, with journalists whose confidential sources were revealed, as well as battered spouses whose ex-husbands suddenly saw their status updates, among those affected. Yahoo says it has been slowly adding Updates functionality to its various products—Yahoo Messenger, Yahoo Profiles—and studying how users respond. This "phased integration," Yahoo says, has elicited "overwhelmingly positive feedback."

The next frontier is to merge Updates with Yahoo’s most important product by far: e-mail. The company is building in a number of safeguards. Users can set limits on each specific activity (certain controls for photos, other controls for news articles), turning Updates off entirely with a single click, or managing even more granular settings on individual posts.

Despite all this, Yahoo may find that users still freak out when social networking mingles with their e-mail on any level. Social networks are about sharing, and e-mail services are intensely private. Like lightning and swimming pools, they just don’t mix.

And despite the many ways there are to turn the service off, users may balk at yet another big Web site forcing them to opt out of something, instead of opting in. “Unless a user proactively opts out of the program,” The Washington Post reports, “those Yahoo e-mail subscribers will automatically be part of a sweeping rollout of features that will incorporate the kinds of sharing done on sites such as Facebook and MySpace.” Facebook is (again) the latest company to encounter a backlash for leading its customers to water. Last week a reluctant CEO Mark Zuckerberg was forced to alter the privacy settings he had pressed on users just a month earlier.

With Updates, Yahoo can probably avoid the kind of outcry that maimed Buzz and stung Facebook simply because of the fact that the company, which has long been in disarray, is not watched as closely as those two giants. Under new CEO Carol Bartz, Yahoo is attempting to pull into focus and make a few excellent products instead of a smorgasbord of mediocre ones. A successful merging of social networking with its massive e-mail base would be quite a trick, but the odds aren't in Yahoo's favor.

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