OPINION
Yahoo's Never-Ending French Nightmare

Yahoo! (Nasdaq: YHOO) is learning an important life lesson, courtesy of the French courts: Make a mistake, and it will always come back to haunt you.

The only unusual thing is that Yahoo's mistake -- allowing Nazi memorabilia to be sold on its auction site in France -- is doing its haunting in ultra-slow motion. It's like a bad French film, and Yahoo! must be wondering whether the credits will ever roll.

Yahoo! is in a funny position, too. It's getting strong support from free speech groups, and the U.S. courts have sort of come to its defense. But this is a no-win situation, and Yahoo! should find a way to admit fault and get this over with sooner rather than later.

It's a Date

A judge this week set a trial date for early 2003 on charges that Yahoo! violated France's anti-hate crime laws by allowing the memorabilia auctions to take place. That court date means Yahoo's alleged infractions, which already date back two years, will have been lingering for three years before they are finally settled.

That's simply too long to have any negative news clouding the horizon, however trite or however well-insulated it is from core issues about Yahoo's corporate health. The issue does not threaten the portal's market dominance and has little to do with profits or other things currently on the front burner.

But it isn't good, either.

Already, a U.S. court has run some interference with the French, saying that Yahoo! is protected under domestic law from having its free speech rights abridged.

But that does not address what are basically criminal charges back in France.

Making Amends

There are sensitivity issues here, of course. America has a hard time understanding just how sensitive Europe is to what happened before and during World War II. But those deep sociological issues aren't Yahoo's problem, quite frankly.

Yahoo's biggest problem is one of credibility. Its claims in U.S. court proceedings that it was unable to filter French nationals visiting its site just sounded silly. In general, Yahoo! knows very well where most of its users are coming from, so to speak.

In fact, the portal admitted as much last year when it signed a deal to bring local advertising to its portal, enabling advertisers to target U.S. users living in particular ZIP codes.

Bite the Bullet

Yahoo! should go the distance. It should, once again and in no uncertain terms, renounce the use of its network to spread what any reasonable person would consider hate propaganda, regardless of how many Constitutional protections it enjoys.

Then it should promise the French to do everything it can to abide by that country's laws and set up roadblocks to at least slow down French Web surfers before they reach the type of content that is likely to cause more controversy.

Finally, Yahoo! should make some meaningful gesture to put right what French officials think was wrong. There must be an anti-hate speech organization that would love a little financial boost.

All of this might seem a bit contrived, lacking in credibility. It's true: Yahoo! has every right to stand up for free speech, to fight for the underlying principles in play. And frankly, the charges against Yahoo! smack of political grandstanding to begin with, so why should the people in Sunnyvale give in?

Two-Front War

They should capitulate because it's the quickest, neatest way to dispose of an unnecessary distraction. Maybe Yahoo's legal department has it all under control, but some amount of corporate energy and time is being put into this defense. Why waste any more resources?

Better to issue a halfhearted mea culpa, apologize and make reparations, even if Yahoo! never admits it was wrong. Being right is great for the ACLU and Constitutional scholars. But the kind of pride and ego that would force a fight to the death is what gets companies in trouble.

Yahoo! is a business. It should leave the free speech battles to the nonprofits and turn all its attention to winning the war for profits. It needs all hands on deck. And they all need to be rowing in the same direction.

What do you think? Let's talk about it.