Facebook buys patents from Microsoft
The social networking giant now has around 1,500 patents, which should help strengthen its defenses against lawsuits.
On the other hand, AOL (AOL) recently sold a boatload of patents to Microsoft (MSFT) for $1 billion, in a bid to monetize its portfolio, raise cash and return it to shareholders. Facebook was reportedly bidding for AOL's patent portfolio, too, but lost out to Microsoft, one of Facebook's biggest backers.
In a surprising turn of events, Facebook has now acquired 650 of the AOL patents from Microsoft, as well as a license to the remaining 275 patents for $550 million. With this move, Facebook has strengthened its defenses, while Microsoft has offloaded some of the patents it didn't need (though retaining a license to them), and recouped some of the costs.
Including these recent purchases, Facebook now has around 1,500 patents, most of them related to the Internet space, social networking and mobile, all of which should help it defend itself against any lawsuits directed at derailing it from its path of rapid growth.
As Facebook steps on the toes of powerful incumbents in the Internet world, like Google (GOOG), Yahoo or Apple, in its quest for expansion, it may face a number of lawsuits in the coming months. With these new patents, and possibly more in the coming months, Facebook will be in a better position to compete with them.
Ted Ullyot, general counsel for Facebook, said the agreement with Microsoft "represents an important acquisition for Facebook. This is another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook's interests over the long term."
We currently have a $82 billion valuation for Facebook, which stands nearly 20% below its rumored $100 billion valuation. Text and display ads account for around 75% of its value, while virtual transactions account for 18%. Facebook competes primarily with Google, Yahoo and Microsoft in the online advertising space.
(Microsoft owns and publishes Top Stocks, an MSN Money site.)
Copyright © 2014 Microsoft. All rights reserved.
Stocks are facing some serious resistance as the bears tear into the market's respite.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.