Microsoft Sells AOL Patents to Facebook to Defend Against Yahoo

Microsoft campus in RedmondMicrosoft and Facebook have announced a whopping $550 million deal under which the social networking giant will be given the right to purchase a portion of the patent portfolio that Microsoft acquired from AOL.

Microsoft acquired almost 1,000 patents from AOL in an auction earlier this month, and as a result of the deal announced today, Facebook will take ownership of some 650 patents. Microsoft will still be able to use these under licence.

Microsoft will retain some 275 patents from the initial purchase. Brad Smith, executive vice president and general counsel at Microsoft, said the deal signed with Facebook was a strong outcome for the firm.

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

Facebook general counsel Ted Ullyot said the deal was an “an important acquisition for Facebook” as it seeks to protect itself in the wake of Yahoo suing Facebook over 10 patents. Weeks later, Facebook bought 750 IBM patents and then countersued Yahoo

“This is another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook’s interests over the long term,” he noted.

The $550 million comes on top of the $1 billion Facebook spent to acqure image service Instagram as the social network giant throws its weight around ahead of its flotation on the stock market. Expected in May, the IPO should value the company at around $100 billion.

This article was originally published on V3.

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