Facebook and Yahoo! bury patents hatchet and forge innovation alliance

7 Jul 2012

Yahoo!’s crudely timed patent suit against Facebook ahead of the latter’s recent IPO has been put to rest and it has emerged that both Facebook and Yahoo! have forged a strategic alliance that involves advertising and expanded distribution arrangements.

The deal includes a patent portfolio cross license and both parties will work together to on consumer and advertising experiences as well as utilising Yahoo!’s large media event coverage.

Yahoo! launched its patent-heavy lawsuit against Facebook at a time when the social network was preparing to go public as part of a US$5bn IPO. In April, Facebook came roaring back with a countersuit of its own.

In the meantime, Yahoo! has seen a recently appointed CEO Scott Thompson step down in the aftermath of a scandal about alleged CV padding and interim CEO Ross Levinsohn take the helm.

Renewed focus on innovation at Yahoo!

“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.”

Originally Facebook and Yahoo! had a close working relationship and Yahoo! launched an integrated feature called Social Bar on more than 100 sites globally and which was used by 90m people, making Yahoo! one of the most active user bases on Facebook’s Open Graph.

Patent warfare would have done neither company any good. The two companies have now agreed to work more closely and collaborate on multiple “tent-pole and anchor events” over the next several years.

“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,” Levinsohn said.

“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.

“Combining the premium content and reach of Yahoo! as the world’s leading digital media company with Facebook provides branded advertisers with unmatched opportunity,” Levinsohn said.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years