Yahoo Outsources All That Social Nonsense To Facebook

Yahoo continues their strategic defeat from the front lines of innovation. Earlier today they announced that they’d be “deeply integrating” with Facebook Connect, allowing Yahoo users “to see your Facebook friends’ activities on Yahoo! and share Yahoo! content – ratings, photos, article comments, and more – directly on your Facebook stream.”

In other words, they’ve given up on their idea of leveraging all the known social connections among Yahoo email, address book and messenger users. Instead, they’ve outsourced all that social nonsense to Facebook.

In April 2008 Yahoo unveiled it’s plans to “re-wire Yahoo from the inside out…as part of this, we are going to make the consumer experience at Yahoo social throughout, and provide hooks for that for developers to do the same.” This was the centerpiece of Yahoo’s go-forward strategy. The company boasted 10 billion social connections among users, and they’d leverage that in the new Yahoo.

As recently as two months ago Yahoo confirmed to me that they were still behind this social strategy, and would be making announcements soon. And their recent re-hire of Daniel Raffel convinced us they were being sincere:

Since returning in late August, Raffel has been serving as a senior product manager under Cody Simms, the senior director of product management for Yahoo Open Source (Y!OS), we hear. He’s apparently working on mainly off-network projects such as making the Yahoo authentication platform more seamless. That might not sound sexy, but the bigger picture may involve Yahoo building out its own platform product to better connect Yahoo with the rest of the web. Yes, think Facebook Connect, Google Friend Connect, and the like. The chance to get into this hot space and play a critical role in building a “Yahoo Connect,” may have also enticed Raffel to come back, but that’s pure speculation at this point.

Little did we know that Yahoo had already decided to give up on social in the same way they gave up on search – by outsourcing it to someone else.

Sure, search may be the most lucrative advertising platform ever imaged, but it was just too capital intensive for Yahoo to continue to compete. They wanted to focus their resources on their core business, which they said, still centered around turning Yahoo into a social platform that leveraged all those 10 billion mail/messenger connections.

Which makes some sense, sorta. Social seems to be the future, and Facebook just may do to Google what Google is doing to Microsoft (ripping apart their core business), if they ever find the right way to monetize it. Social graph monetization may be the next huge wave of revenue growth on the Internet.

But it sure won’t be Yahoo monetizing it. Because they just gave all that away to Facebook.

More and more Yahoo, still with half a billion monthly unique visitors, looks to be a site that cares little for technology. All that hard stuff can just be outsourced, obviously. And Yahoo seems very inclined to do it. They were 0-4 on social network tries until today. By my count, they’re now 0-5.

This company has no fight left in it.