Yahoo! Concedes Identity Race by Allowing Login with Facebook and Google OpenIDs

Yahoo! has announced that it will open its network of sites to third-party authentication through Facebook and Google OpenIDs. Users will be able to login or create accounts on the web versions of Flickr, Yahoo! News, and other services with their Facebook or Google account. By becoming an OpenID relying party, Yahoo! has conceded the race to become the premier online identity provider, and settled into its role as a content portal.

The third-party authentication system will ease the new user onboarding process, which could help Yahoo! sites retain visitors sent that way from links shared through Facebook or Gmail. Creating a dedicated Yahoo! account is a lengthy process, requiring users to set up a new email address, add demographic data, establish security questions, and complete a Captcha.

These new speedier alternatives improve the Yahoo! user experience and should increase sign-up rates. Users will still have to use their Yahoo! credentials to interact with desktop clients or mobile versions of Yahoo!’s properties.

When users without an existing account want to comment on a Yahoo! News article, for instance, they’ll be prompted to choose from using Yahoo!, Facebook, or Google to register. Selecting Facebook brings up a Facebook login prompt if they aren’t already signed in. They’re then shown a Request for Permission dialog asking for their basic information, email address, and birthday, followed by a seemingly redundant pre-populated Yahoo! dialog asking them to confirm their name and birthday before being deposited back on the original site. The Google flow is slightly longer, requiring users to manually enter their birthdate.

While Yahoo! remains an OpenID provider, its status as a relying party for registration places it on a second tier of web services beneath Facebook and Google, both of which don’t allow users to create accounts based on third-party credentials. Similar to MySpace’s recent retreat from social networking to entertainment content channel, Yahoo! is refocusing on what it does well by smoothing access to its deep content management features.

This leaves Facebook and Google to compete for the role of defacto internet identity provider. Despite Gmail’s supremacy and the wealth of Google services that integrate identity, it’s Facebook that owns the social graph. The widespread adoption of Facebook Connect and its social plugins, and the importance of their social recommendations to ecommerce and content engagement position Facebook to better control identity on the internet.