It Had to Happen Sooner or Later: AOL Actually Outsmarts Someone

By Sarah Lacy , written on April 23, 2012

From The News Desk

The Internet's patent-swapping extravaganza rolls on. Facebook has announced that the company will spend $550 million for a large chunk of the patent portfolio that Microsoft bought from AOL earlier this month for a cool $1 billion. Facebook will now own roughly 650 AOL patents and have a license to another 300 that AOL didn't sell in the auction.

Yeah, we told you Facebook wasn't going to roll over and settle with Yahoo. That is just not how the company rolls.

Facebook wouldn't comment and there's nothing in the release that brings up the Yahoo fight explicitly, but this clearly strengthens the company's position.

Another thing is astounding about this story: The ever-bumbling AOL has actually done something smarter than Yahoo, the purple dinosaur. Both had a lock on early Internet patents, both are companies struggling under shareholder pressure, and both desperately need to unlock value in aging assets while they grapple for future relevance.

And yet, the companies undertook two different patent strategies. AOL sold and licensed its patents for a cash injection of more than $1 billion. ($1 billion is roughly three HuffPos for those of you keeping track.) Yahoo wanted money too, but it chose to use its patents to extort that kind of cash out of Facebook via a conveniently timed lawsuit -- with zero attempt at negotiations before hand.

How did each end up? Well AOL got $1 billion, and Yahoo might get something. What it gets for sure is protracted legal battles, a major PR black-eye, and a collective punch in the face by Silicon Valley. Go, team purple!