The data policy is not just inclusive of their search data but also their page views, page clicks, ad views and ad clicks. Yahoo does reserve the right to retain data longer than 90 days based on the exceptions for fraud, security and legal obligations. Those exceptions will typically be held for 6-months, but possibly longer based on legal requirements.
Clearly, this may put pressure on Google to reduce their 9 months data retention policy to a 3 month policy. Google has already reduced, by half, their initial 18 month policy due to pressure from the European Union. You can learn exactly how Google’s data retention policy works over here, hopefully we will have a similar article for Yahoo in the near future.
Is this more a publicity stunt by Yahoo to generate interest in the service, similar to how Ask.com played up adding a privacy link to its home page and AskEraser, its “instant delete” feature? If so, those moves didn’t help Ask.com and even earned an FTC complaint.
For more news around Yahoo’s announcement, see Techmeme.