Yahoo revises privacy policy

The new policy states that Yahoo will share information to investigate circumstances involving illegal activity such as fraud, violations of its terms of service agreement, and the use of its service for potential threats. The revision also said Yahoo will transfer user information if it is acquired by another company and abide by the acquiring company's privacy policy.

The changes were sparked by economics and the ongoing trend among companies to comply with investigative bodies following the Sept. 11 terrorist attacks.

"It's the swinging of the pendulum," said Evan Hendricks, editor of privacy newsletter Privacy Times. "It has swung very much toward making it easier to disclose information."

Stating a policy for user data in the event it is acquired could also clear a barrier for Yahoo's future. If the company's policy prohibited it from sharing user data with anyone, Yahoo users could pose a legal challenge to any transfer of user data to a new owner, Hendricks added.

Indeed, Internet companies that have explicitly barred sharing user data with any third parties have stumbled into legal problems when entering into a merger or acquisition. Last summer, Fry's Electronics' proposed acquisition of Egghead.com hit a stumbling block because of this privacy barrier. Fry's eventually cancelled its $10 million bid.

Yahoo's privacy was previously separated into three categories for children, financial information and its overall terms of use on its site. Srinjia Srinivasan, vice president and editor in chief at Yahoo, said the changes were made mainly to consolidate the three policies into one, and to elaborate certain cases where personal data would be used.

"Fundamentally our approach remains unchanged," Srinivasan said. "It's always been a mantra of notice and choice. We're always looking to make this complex issue as clear as possible."

She added that Yahoo worked closely with Truste, which vouches for sound Internet privacy practices, to craft its changes.

Yahoo will begin e-mailing a notice of the changes beginning Thursday morning to all people registered on Yahoo.com. Given the size of this population, the e-mailings will not be completed for a few weeks. International sites will not be included.

In addition to the policy changes, Yahoo revised the way it offers information about its own products.

Yahoo users will now automatically have their marketing preferences set to accept updates from a smattering of Yahoo's businesses. Previously, users were offered one option to either accept or reject product notices when first registering on the site.

Users will have to click "no" to opt out of receiving e-mails from a selection of 13 Yahoo products, ranging from job listings to new media products to inclusion in Yahoo's user surveys, among other things. The page also has an option for users to opt in to the Yahoo Delivers service, which sends product pitches from third parties.

Yahoo users will have 60 days upon receiving notice to opt out of these promotions.