In a nod toward privacy, today Yahoo  said it would only keep personal data on searchers and portal users for 90 days (double that in cases of fraud or suspicious activity). This ups the ante for other search firms Google, which halved its data retention time to nine months in September, and Microsoft, which has said it will drop its data retention times to 6 months if its competitors did. Prior to this announcement, Yahoo kept data for 13 months.

Here’s how Yahoo plans to scrub the data, which includes not just search, but page views and ad views as well:

• Delete the final octet of the IP address
• Yahoo! ID will be one-way secret hashed and the last 50% of the hashed identifier is truncated
• Cookie identifiers are one-way secret hashed
• We add an additional search filter for personally identifiable info in search logs such as credit card numbers or social security numbers

The search firms are responding to increasing government and consumer concern about online privacy–namely a European Union effort to get search firms to delete user information after 6 months — and likely the creation of a telecommunications-backed lobbying group that hopes to set the nation’s agenda when it comes to online privacy. Microsoft has a member on the board of that group, called The Future of Privacy, but Yahoo and Google do not.

Yahoo’s move is a good start for those concerned about privacy, but we’re still going to have to start talking about what controls consumers have with regard to their data and when privacy trumps the greater good.

Facebook has postponed its employees’ stock sale, perhaps indefinitely, the Wall Street Journal reports today.  Facebook’s postponement is an understandable bow to market reality — and it prevents the company from setting an official valuation that the social networking site’s investors would consider too low. The market is pretty sure the company is worth less  than the $15 billion Microsoft bought into, or even the $4 billion internal valuation, but until a sale occurs, that value is theoretical (even if that theoretical value has very real business impacts).  Maybe by the time its investors are required to officially asses the value of their investment in the social network, times will be flush, and they won’t have to write it down. But given the Microsoft money, I really doubt it.

Looks like Yahoo’s Jerry Yang’s ham-handed handling of the Microsoft offer is coming back to bite him. At a Friday business lunch in Australia, Steve Ballmer, CEO of Microsoft, put on the airs of a spurned lover and told luncheon attendees that he wasn’t buying Yahoo, although he might consider a search engine partnership. The Associated Press quotes Ballmer as saying:

“We made an offer, we made another offer, and it was clear that Yahoo didn’t want to sell the business to us and we moved on,” Ballmer said. “We are not interested in going back and re-looking at an acquisition. I don’t know why they would be either, frankly. They turned us down at $33 a share.”

Well it looks like Ballmer is reading his advice columns and standing up for his self-esteem. Either that or his lawyers have had a quick chat with him after his comments a few weeks ago, when he said a Yahoo deal still made sense economically.

Yahoo’s shares, which ended Thursday’s session at $13.96 a share, look like a bargain, and on Wednesday, Yang even said he’d do a deal with Microsoft after a search partnership with Google fell through. The question now becomes whether Yahoo would lower itself to a search partnership with Microsoft or if it will try to hold out for marriage. If the two companies let hurt feelings stand in the way of a partnership or a deal, it’s Google that wins.

Despite Microsoft CEO Steve Ballmer saying earlier today that a deal to buy Yahoo would still “make sense economically,” Microsoft wants you to know that it has no intention of doing so. A couple of hours after Ballmer spoke at the Gartner ITXpo in Orlando, Fla., and Yahoo’s stock shot up 15 percent, Microsoft issued the following statement: “Our position hasn’t changed. Microsoft has no interest in acquiring Yahoo; there are no discussions between the companies.”

In an alternate universe that might settle things, but not here. Ballmer’s clearly interested, but isn’t going to overpay. At the Gartner event Ballmer also made fun of Yahoo for likely thinking it was still worth today what it was back in February, when Microsoft was negotiating to buy it. This morning, before Ballmer made his comments, Yahoo’s shares opened at $11.82, way below the $37 a share Yahoo thought it was worth in February. Since then, Yang hasn’t exactly been able to steer the company anywhere, not even into a deal with Google.

Microsoft today unveiled its next-generation Communications Server product that will allow users to replace their existing phone systems with Microsoft’s software. It’s about time Redmond pushed its VoIP offering further. The product, which goes on sale in February 2009, replaces a PBX system with Microsoft’s VoIP software on a server, allowing employees to make calls to any phone number, to make calls from within Microsoft documents and adding audio conferencing.

The VoIP functionality and integration with Microsoft’s SharePoint product is Microsoft’s answer to the challenge Cisco is offering in the unified communications space. It has some nice features, especially the ability to use presence awareness, VoIP and IM on select mobile phones.

It’s funny how the more things change, the more things stay the same: I recall back in 1999 writing about unified communications, which at that time meant a one-stop online shop for emails, voicemails and faxes, with nothing real time about it. Today, we have the ability to connect with people in real-time via IM or VoIP while simultaneously sharing online documents, but we’re still looking for that one-stop repository for all of our communications.

Microsoft aims to make its programs that one stop, by tying this next generation Communications Server to its SharePoint software. It allows users to see presence and call while within Microsoft programs, meaning employees don’t have to go to a separate presence application to talk or IM about a spreadsheet or Word document. That makes Office the one-stop shop for all communications, including those in real-time.

Cisco is taking a different tack, judging from its recent acquisitions and its CEO’s comments about the opportunity. It plans to create a separate layer of communications services such as IM and VoIP that will sit in the network and work across a variety of applications. If it can be a well-integrated, neutral vendor, it could blow Microsoft out of the water.

In times of trouble people like to revisit what they know, and what could be more familiar than the ever-present effort to get Microsoft and Yahoo together at last? Mithras Capital Partners has floated a proposal that Microsoft buy Yahoo for $22 a share, or 74 percent more than its closing price on Thursday. According to Reuters, Microsoft could then unload Yahoo’s Asian assets and recognize $3 billion in savings, making for a total deal cost of $10.3 billion.

Since the plan seems crazy, given the MicroHoo history, Mithras’ small stake (.14 percent) and the current economy, I wondered who the heck Mithras Capital is, and a bit more about its investment strategy. Surprise, Mark Nelson of Mithras Capital is not a fan of the Yahoo-Google search deal! While Mithras has been pushing a sale of Yahoo to Microsoft for months, they also have ownership stakes in SourceForge (5.6 percent as of August) and Transmeta (4.9 percent in June). SourceForge owns the Slashdot web sites as well as ThinkGeek. Apparently Mithras has tried to meet with management at SourceForge, but management has refused.

Transmeta, the beleaguered chipmaker turned intellectual property shop, put itself up for sale in September, and has seen its stock reach a 52-week high while the rest of the market bombs. There’s no indication in Mithras’ SEC filings that they’ve met with Transmeta executives. Perhaps this Yahoo stunt is an attempt to get its name in the paper and strike fear in the hearts of management at its other investments. Or maybe given the economy, it feels it has nothing left to lose.

Updated: Last night Google said it would cut the amount of time it saves its search engine inquiries from 18 months to nine months. Actually, what its doing is anonymizing the data after nine months rather than 18, which is has been compelled to do after EU and U.S. reglators turned greater attention to the lack of privacy on the web. The negative publicity and government scrutiny drawn by deep packet inspection firms NebuAd and Phorm working with ISPs to mine your web surfing habits for profit, was tarnishing Google and other search engines as well.

But Google isn’t exactly happy about this new prudishness on privacy and whines that losing such detailed information so quickly could be bad for business (and innovation!):

While we’re glad that this will bring some additional improvement in privacy, we’re also concerned about the potential loss of security, quality and innovation that may result from having less data. As the period prior to anonymization gets shorter, the added privacy benefits are less significant and the utility lost from the data grows. So, it’s difficult to find the perfect equilibrium between privacy on the one hand, and other factors, such as innovation and security, on the other.

Unfortunately for Google, there’s no rational equilibrium or cost/benefits analysis in this debate because people are different. Privacy is one of those things that people have a hard time putting a dollar value on, and everyone is different. Some people will take their clothes off for free, for money or never at all. Maybe the Google engineers can create an algorithm that respects that continuum and factors in the way heightened scrutiny affects where people lie on that continuum. Until then, we’re checking in with other search providers to see how Google’s decision will affect their own data retention policies.

Update: Through a spokeswoman, Yahoo has said it anonymizes data for 13 months and will still “continue to engage in a thoughtful dialogue with regulators and legislators in the EU and the U.S. about the best practices for protecting user privacy while improving our leading set of Internet services.”

Microsoft didn’t disclose any details, but sent a statement from Brendon Lynch, director of privacy strategy at Microsoft, that said, “The Article 29 Working Party has asked all major search companies to look into reducing their search data anonymization timeframes and how they anonymize search data, which we believe is equally as important as the timeframe. We will have more to share in the next few months.”

Greenfield Online, the parent company of Munich-based comparison shopping site Ciao, said this morning that Microsoft would spend $486 million to acquire it, derailing an earlier offer from a private equity firm to buy the company. The Ciao sites operate in France, Germany, Italy, the Netherlands, Spain, Sweden and the UK.

For Microsoft, the hope is that the deal will help boost its search business overseas. After the failed bid for Yahoo, Microsoft has been reeling around like a spurned lover trying desperately to fill the gap — with cash-back rebates for search engine users — while strategically looking for markets where it has a real chance at gaining share in search.

But Europe might not be that market. According to the most recently available comScore data, Google had almost 80 percent of the European search market in March while Microsoft had close to 2 percent. However, Google’s own comparison shopping engine, Google Product Search, is currently an English-only service. With Ciao, Microsoft could take advantage of Google’s relative absence in certain languages. As of January, Ciao was the top comparison shopping engine in Europe with 30 percent of the market, while Google was 18th, with 2.5 percent. It’s an opening, but it appears to be a small one.

image courtesy of Ciao

Jerry Yang, Yahoo’s CEO, may be learning something about the hard-driving style of management it takes to go it alone after an attempted takeover, especially if he follows Om’s logic and thinks Yahoo is about more than search. This morning, Yahoo said it will allow corporate raider Carl Icahn three seats on a newly expanded Yahoo board in an effort to settle the disagreement that is taking up so much of the web portal’s attention this summer. This ends the proxy battle, and Yang has brought Icahn in-house despite — or perhaps because of — the trouble he’s caused.

The deal gives Icahn and two other board members of his choosing spots on an 11-member board. Shareholders will choose from Icahn’s previously named slate of potential directors and newly named Jonathan Miller, currently a partner in Velocity Interactive Group and former chairman and CEO of AOL. This will settle the proxy battle Icahn began after Microsoft’s failed bids for Yahoo earlier this year, and make the Aug. 1 shareholder meeting a less contentious one.

However, it’s unclear what this peace offering means for Microsoft, which has expressed interest in doing a deal with Icahn should he gain control of Yahoo. Icahn’s board presence isn’t likely enough to sway Microsoft to put up the cash required to do a deal that Yahoo might sabotage while waiting for the closing. We’ll update the story as Microsoft comes out with its stance.

Summer is generally a slower time for news and this summer is no exception. But the kind folks at Microsoft, Yahoo and Carl Icahn’s investment firm are charitably offering up a form of entertainment with their ongoing Let’s Make a Deal saga.

The latest installment is a letter to shareholders from Yahoo CEO Jerry Yang that accuses Microsoft of flip-flopping, creating confusion and generally not wanting to make a deal. The letter also also reiterates Yahoo’s desire to sell the entire company at $33 per share — or if that’s not interesting, just the search assets.

Let me tell you, Yahoo, playing hard to get is smart, but this letter is no way to get the guy of your dreams. In fact, rumor has it Microsoft is seeing AOL now, and everyone knows AOL hasn’t always made the best choice in relationships.

This stuff may play well in Silicon Valley, but outside of it the world is not watching. While Kara Swisher dutifully calls her sources and provides us with the ins and outs of the wheeling and dealing, the audience outside the tech world is yawning. This started back in February (2007 if you believe the original offer from Microsoft). Let’s finish this, so the world can really focus on the banking crisis or high gas prices.

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