The recent Microsoft-Facebook deal

The recent Microsoft-Facebook dealIt has become a common practice in the online world for big companies to join forces in order to create a strong defense against the competition. This practice also makes it even easier for both parties to benefit in terms of sharing a large audience. Earlier this month AOL sold more than 800 patents to Microsoft for a staggering $1.056 billion. Microsoft recently helped solidify that investment by partnering with the giant of the social media world.

Monday, April 23, 2012, Microsoft confirmed a deal with Facebook worth a reported $550 million. This deal will allow Microsoft to either license or outright sell many of the patents the company got as part of its deal with America Online. There were 925 patents that Microsoft acquired in the AOL deal; approximately 650 of those patents will now be owned by Facebook.

Brad Smith, the executive vice president of Microsoft states that “today’s agreement with Facebook enables us to recoup over half of our costs while achieving our goals from the AOL auction. As we said earlier this month, we had submitted the winning AOL bid in order to obtain a durable license to the full AOL portfolio and ownership of certain patents that complement our existing portfolio.”

Yahoo sued Facebook in March 2012, claiming infringement on ten Yahoo patents that speak to the functionality of social networking. Considering Facebook’s position as king of the social networking world this was a pretty bold move. The fact Facebook decided to strike this deal with Microsoft gives the social brand more ammunition on top of the 750 patents the social medium purchased from IBM in its current countersuit against Yahoo.

More important, this move by Facebook could make the company even more desirable to investors when the company goes public this May. It is going to be a very interesting next few weeks for Facebook!

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