Facebook Buys $550 Million in Patents from Microsoft- What it Means

Big news this morning on the social media front. Facebook has purchased $550 million in AOL patents from Microsoft. The move comes after Microsoft purchased the AOL patents for $1 billion a few weeks ago. Facebook will be taking 650 of the 925 AOL patents that Microsoft originally purchased.

With the purchase, Facebook now owns 1,460 patents, only 60 of its own. Facebook has been in the headlines lately due to a lawsuit over patents with Yahoo. Yahoo claims they illegally used several social networking and online advertising patents.

Facebook undoubtedly purchased AOL’s patents to give them a higher boost in the online legal space, and Yahoo took this as an opportunity to show that their lawsuit against Facebook is real:

“Nothing about today’s action changes the fact that Facebook continues to infringe our patents.  Companies who purchase patents are often working from a position of weakness and take these actions to strengthen their portfolio. We see today’s announcement as a validation of our case against Facebook.”

So what does this mean?

1. It increases Facebook’s position in the online legal space, allowing them to venture into more activities with additional protection and less fear of infringing on other patents. Many companies own patents to technologies Facebook can or want to use in the future. This will help them enter into more spaces and expand their offer.

2. It gives them a stronger position as their IPO is made. Additional ownership of patents will be much more appealing to investors.

3. It enhances their partnership with Microsoft. Facebook already uses Microsoft in its map and search capabilities (Bing).

4. In the end, it doesn’t mean too much for us social media users, just that Facebook could provide us more services in the future. It puts them in a stronger position to compete with Google.

-Bryan Nagy

Source: BusinessInsider