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After 2-Day Scrutiny, Yahoo! Pulls Out of Porn

A mere two days after Santa Clara, Calif.-based Yahoo! Inc. announced that it would allow partners to sell pornographic material in its Yahoo! Shopping channel through an "Adult and Erotica" store, the bellwether portal company made an about face and said it will remove adult-related merchandise from its network.

Yahoo! said adult-related products -- like videos and DVDs -- will come off the virtual shelves in Yahoo! Shopping, Yahoo! Auctions and Yahoo! Classifieds. In addition, the company said it will no longer enter into new contracts for adult-related banner advertisements on the Yahoo! network. The company plans to implement the changes in the U.S. over the next five weeks.

Yahoo! confirmed Wednesday that it was venturing further into the controversial adult arena in an effort to develop new sources of revenue following one of the worst quarters in the company's history. It also said Wednesday that it would cut 420 jobs, about 12 percent of its workforce, over 30 days.

Yahoo! would not have gotten into the adult business directly, but rather would have allowed partner merchants to sell materials from its network. The company would then have taken a portion of the revenues generated by sales. Also, the company charges retailers fees to be listed in its directory.

But analysts viewed the move skeptically, and at least one group, the Sacramento, Calif.-based Capitol Resource Institute, called on consumers to boycott Yahoo!. The Capitol Resource Institute is a conservative lobby group. Analysts didn't take the moral ground, but suggested that the venture would add little to Yahoo!'s bottom line while risking the company's wholesome reputation.

Yahoo!, apparently, got the message loud and clear.

"At Yahoo!, we value the strong relationships we have with our members and have consistently listened to them," said Jeff Mallett, president and chief operating officer of Yahoo!. "While Yahoo! has offered controlled access to adult products available via the Internet since launching our commerce services more than two years ago, many of our users voiced concerns this week about some of the products sold by merchants on Yahoo! Shopping. We heard them and swiftly responded. We consistently strive to act responsibly and constantly evaluate our policies based on what our users tell us."