Yahoo!’s move is brilliant! Their logic comes from the old adage “If you can’t beat them, join them!” And that adage works! Anytime I start a new business entity, I look at the largest competitors and make them partners, affiliates, contributors. This way you disarm them as competitors. Yahoo! Has been losing ground for nearly a decade. Failed attempts at acquisition and loss of market share has caused their stock to plummet and remain there. Other than providing a home page, Yahoo! Hasn’t really provided any additional value. By partnering with Facebook, they get traffic! And traffic directly relates to revenue. It’s the best of both worlds; Yahoo! doesn’t have to develop their own offering, they don’t have to compete with the Facebook giant, they simply “camp-on” to Facebook’s success, and garner revenue by association.
Personally, I don’t think the timing was based on Facebook’s faux pas because the continued success Facebook will mean continued traffic / revenue for them. They should wish Facebook well and support them. I don’t see that Yahoo! Users will run the risk of any privacy risks, Facebook and Yahoo! Will still maintain their own respective member databases as well as maintain their own privacy policies. The integration only means easy integrated access to both social sites. Yahoo! Users will still have all of the security that Yahoo! Has always provided.
I think strategic partnering is always a great strategy, especially when Yahoo! Is so overdo for a great strategy. If I were the share holders of Yahoo!, I would be yelling “Yahoo!”