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Google announced that they have decided to shut down Lively platform in the end of his year.

despite all the virtual high fives and creative rooms everyone has enjoyed in the last four and a half months, we’ve decided to shut Lively down at the end of the year. It has been a tough decision, but we want to ensure that we prioritize our resources and focus more on our core search, ads and apps business. Lively.com will be discontinued at the end of December, and everyone who has worked on the project will then move on to other teams - Google blog.

Furthermore:

We will shut down Lively on December 31, 2008. Embedded rooms in blogs and other web pages will continue to show an image, but users will no longer be able to enter Lively rooms and interact.

Between now and the end of the year we encourage you to capture all your hard work by taking videos and screenshots of your rooms. Thank you for sharing this experience with us. We’ve learned a lot about how users interact in rich social environments, and we hope you’ve enjoyed your time with Lively - Lively.

Basically it means that Google decided to focus more on improving its search results rather than developing extra projects on a side. As long as it helps users, its the right decision.