updated 04:31 pm EDT, Fri July 6, 2012
Facebook and Yahoo turn lawsuits into collaboration partnership
[Update: settlement confirmed] Reports of Facebook and Yahoo being close to solving their differences over patents surfaced last month, and it seems the two have now fully resolved their differences through a settlement. The agreement will see the relationship expand, with joint advertising and cross-licensing of certain important patents. The deal was approved by both companies earlier on Friday, and sources say that no money or stock swaps were involved in the settlement.
While the arrangement avoided both further legal action and payouts on both sides, though the two are expecting new revenues from the deal's collaboration on future products, services and "premium media experiences." The door is also open for Facebook paying Yahoo at a later date for licensing patents that aren't included in this deal.
It's believed that an arrangement to sell big events and other packages to advertisers will come as a result, and Facebook will allow Yahoo to use the information it collects from users on their Likes for its advertising. Facebook will get user contact data from Yahoo in return, the sources said.
The legal battle started in March, when Yahoo took Facebook to court of allegedly infringing on its patents, with Facebook fighting back in April with a claim that Yahoo is infringing on some of the patents it holds itself.
In announcing the new deal, both companies made reference to plans for expanding opportunities for marketers and advertisers. Yahoo Interim CEO Ross Levinsohn said that "combining the premium content and reach of Yahoo as the world's leading digital media company with Facebook provides branded advertisers with unmatched opportunity."
Sheryl Sandberg, the COO of Facebook, echoed the comment while inferring that Levinsohn's ascension to CEO at Yahoo helped make the settlement happen. "Yahoo's new leaders are driven by a renewed focus on innovation and providing great products to users," she said. "Together, we can provide users with engaging social experiences while creating value for marketers."