“…a Gmail pilot project was shelved due to concerns about security and information privacy, based in part on the missteps surrounding the launch of Google Buzz. The school’s technology leaders were also concerned that the University of California system’s policy on e-mail might forbid the use of third-party e-mail providers in general.”

Taking a look at this I would have to say that Buzz may have been the deciding factor in this situation, but not the entirety of it. I have a feeling that UC Davis’ IT department may be employing some severe type of policies that Gmail (and even other third-party email providers) won’t be able to stand up to. So, instead of a blow to Gmail, it may be just a general blow to the cloud.