Yahoo apologizes for Cyber Monday commerce outages

One very non-economic reason for small businesses perhaps receiving less of the glory from Cyber Monday comes from Yahoo, whose Merchant Solutions hosting service suffered severe outages throughout the day.

Yesterday afternoon, Yahoo representative Rich Riley found himself confessing a serious problem with the commercial hosting service it provided for some 40,000 small business customers on Monday -- arguably the most important online shopping day of the year.

"The system outage occurred at one of the worst possible times," Riley wrote on Yahoo's corporate blog, "and despite our concerted efforts to fix the problem as it emerged on Monday, we know that we let our merchant partners and their customers down. The good news is that our systems are now operating normally, and our merchants are able to accept orders from their customers."

Customers started noticing connection problems as early as 6:00 am Pacific Time yesterday, and they continued throughout the day, preventing access as late as 1:00 pm -- 4 o'clock on the east coast. System throughput was restored by 6:00 pm PT, Riley said, but by that time, most customers in the Eastern US were busy voting for Helio Castroneves' performance on Dancing with the Stars.

"As for the future, rest assured that we are taking the necessary steps to prepare for the peak holiday selling season," Riley wrote. "We have technical and customer relations staff mobilized and ready to support our partners."

But what Riley did not mention was one more very important piece of data: whether Yahoo's responsibility for its outages, which its own graphic calls a "mea culpa," will extend to the point of refunding its small business storefront customers for lost service. That could become a legal nightmare for the company, as online retailers haggle with Yahoo over what metric to use when determining appropriate compensation.

If hosting services were a public utility, there would be no problem: Service was out for roughly a day, and if a customer pays by the month, it would be compensated for 1/30 of its service. But as Internet Retailer reports this morning, OnlineStores.com, which operates multiple storefronts hosted by Yahoo Merchant Solutions, estimates it lost at least $35,000 in sales on Monday, as its sales volume plummeted to 20% of that of a normal day.

Strangely, the online forums for customers of Yahoo-hosted retailers were working perfectly yesterday. One retailer reported a complaint thread posted there was read 12,500 times just yesterday.

Retailers received this statement from Yahoo yesterday: "Yahoo's relationship with our merchants is extremely important to us and we value their loyalty. We deeply regret any inconvenience this may have caused." But today, Yahoo's effort at face-saving may have to be redirected toward saving some other part.