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.”
Facebook and Yahoo have agreed to settle a months-long patent dispute, averting a potentially expensive battle over the technology running two of the Internet’s most popular destinations.
In dropping the lawsuits, the companies agreed to license their patents to each other and form an advertising and content-sharing alliance that expands their existing partnership. Friday’s settlement involves no exchange of money.
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Now that the antagonism is dissolving into an accord that could benefit both companies, the hundreds of millions of Web surfers who use both Yahoo and Facebook should find even more common ground on the two services..
The advertising alliance could help Yahoo recover some of the revenue that it has been losing as marketers shift more of their spending to a larger and more engaged audience on Facebook’s online social network. Facebook, in turn, gains the opportunity to show the ads tailored to fit the individual interests of its 900 million users in other heavily trafficked areas besides its own website.
The truce ends a conflict provoked by Yahoo’s short-lived CEO, Scott Thompson, who was dumped from the job two months ago after misinformation on his official biography raised questions about his integrity.
Under Thompson, Yahoo filed the patent lawsuit in March, wielding it as a weapon against a company that Thompson believed had been prospering from the ideas of its older rival. The complaint alleged that Facebook infringed on 10 Yahoo patents covering Internet advertising, privacy controls and social networks. Yahoo Inc. later added two more patents to the lawsuit.
The Official Press Release:
SUNNYVALE, Calif. & MENLO PARK, Calif.–()–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.
Yahoo! (NASDAQ:YHOO) is a technology powered media company, creating
deeply personal digital experiences that keep more than half a billion
people connected to what matters most to them, across devices and around
the globe. Yahoo!’s unique combination of Science + Art + Scale connects
advertisers to the consumers who build their businesses. For more
information, visit the pressroom (pressroom.yahoo.com)
or the company’s blog, Yodel Anecdotal (http://ycorpblog.com/).
Yahoo! is the trademark and/or registered trademark of Yahoo! Inc.
Founded in February 2004, Facebook’s mission is to give people the power
to share and make the world more open and connected. Anyone can sign up
for Facebook and interact with the people they know in a trusted
environment. Facebook is headquartered in Menlo Park, Calif.