Kara Swisher

Recent Posts by Kara Swisher

Yahoo and Facebook Patent War Officially Over: The Press Release

As I reported earlier today, Yahoo and Facebook confirmed in a press release after the markets closed that they had settled their cantankerous patent lawsuit. As part of the deal, the pair have also agreed to dramatically expand their content distribution and data partnership, as well as add a joint advertising effort to it.

The companies are calling it a “strategic alliance.”

Peace now reigns in Silicon Valley between the Internet portal and the social networking giant, which had — previous to this ugly legal kerfuffle — been longtime partners.

We can now go back to our regularly scheduled fighting between Facebook and Google, Google and Apple, Apple and Amazon, Amazon and … oh, you get my point here.

While Yahoo and Facebook declined to provide a whole lot of details about the agreement, sources said it encompasses cross-licensing of some key patents and the possibility that Facebook could buy or license more such intellectual property from Yahoo in the future.

In addition, as I previously reported, no actual cash payment will change hands under terms of the deal over the patents, in contrast to the $550 million that Facebook paid Microsoft recently in another transaction related to AOL patents.

But Facebook and Yahoo hope there will be significant upside in several possible advertising opportunities and other business deals between the pair that could yield large revenues if executed well.

Discussions to settle the lawsuits — negotiated by Yahoo interim CEO Ross Levinsohn and Facebook COO Sheryl Sandberg, among others — began almost as soon as Yahoo’s board ousted former CEO Scott Thompson, which I reported on in early June.

Thompson reportedly promised Yahoo directors a big financial payoff of many billions of dollars from the patent lawsuits against Facebook.

Instead, the pair decided to settle the case, which had been a drag on Yahoo’s tech reputation and was also not helping Facebook much, either.

Plus, continuing it would have been pricey and, probably, pointless in the end.

Here’s the press release:

Yahoo! and Facebook Launch Strategic Alliance and Resolve Patent Dispute

SUNNYVALE AND MENLO PARK, CALIF. –JULY 6, 2012 – Yahoo! (NASDAQ: YHOO) and Facebook (NASDAQ: FB) today announced that they have entered into definitive agreements that launch a new advertising partnership, extend and expand distribution arrangements, and settle all pending patent claims between the companies.

Under the agreements, which include a patent portfolio cross-license, the parties will work together to bring consumers and advertisers premium media experiences promoted and distributed across both Yahoo! and Facebook. Yahoo! and Facebook will also work together to bring Yahoo!’s large media event coverage to Facebook users by collaborating on social integrations on the Yahoo! site.

“We are excited to develop a deeper partnership with Facebook, and I’m grateful to Sheryl and her team for working hard together with our team to develop this dynamic agreement. We are looking forward to building on the success we have already seen to provide innovative new products and experiences for both consumers and sponsors,” said Ross Levinsohn, interim CEO of Yahoo!. “Combining the premium content and reach of Yahoo! as the world’s leading digital media company with Facebook provides branded advertisers with unmatched opportunity.”

“I’m pleased that we were able to resolve this in a positive manner and look forward to partnering closely with Ross and the leadership at Yahoo!,” said Sheryl Sandberg, Chief Operating Officer at Facebook. “Yahoo!’s new leaders are driven by a renewed focus on innovation and providing great products to users. Together, we can provide users with engaging social experiences while creating value for marketers.”

Since the launch of the original multi-year partnership between Yahoo! and Facebook that allows users to discover and connect news and information on Yahoo! sites and share them with their Facebook friends, Yahoo! has integrated the feature called “Social Bar” on more than 100 of its properties globally, and more than 90 million users have implemented it. As a result,Yahoo! has the largest active user base among all news sites that have integrated with Facebook’s Open Graph platform, making Social Bar the world’s leading social news application.

Going forward, Yahoo! and Facebook have agreed to work more closely and collaborate together on multiple tent-pole and anchor events annually over the next several years to provide unparalleled experiences for consumers and world-class sponsorship opportunities for advertisers.

And, if you are a glutton for patent punishment, here I am blabbing away about the deal on the WSJ.com’s Digits show earlier today:


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