Yahoo apparently is foregoing the big acquisition path and betting that it can succeed in a battle against Facebook, MySpace, Bebo and others with a homegrown social network, Mash. It's an invitation-only service at this point. Yahoo isn't reinventing the category--Mash mashes up MyYahoo, the likely extinct Yahoo 360 and Facebook features, with a profile page and modules, such as Flickr photo feeds, Astrology and a feed of friends updates. Yahoo plans to open module development to third parties, although its not clear whether it will allow access to the social graph as Facebook does.
Mash is a critical initiative for Yahoo, which is focused on the time-spent metric. With a half a billion users, many who are spending time on Facebook, Yahoo has to stop the bleeding, through internal development and acquisitions.
As Facebook has shown most recently, social networking is the new search, in terms of the high growth Internet application. Google is also developing social networking beyond its Orkut service (which dominates in Brazil) with Makamaka, which uses Google Reader's backend to create feeds of "social activities."
Facebook expects to have more than 200 million members in the next 12 months, and a valuation closer to $10 billion than the nearly $1 billion Yahoo offered to the company last year.