Computer Support Blog

So far, 2012 has been a particularly brutal year for patent fights within the tech sector.  It is almost as if every software giant and major manufacturer of electronic devices, tiring of having to produce new products, equipment, and programs, collectively decided that they were just going to try to sue their way to continued financial growth!  All of the major tech companies – Apple, Google, Microsoft, etc. – have been going to court the last few months to menace one another with lawsuits over violations to patent laws with huge dollar figures attached to the motions.  Apple Computers, seeing the Samsung Galaxy Nexus as a genuine threat to its iPad, sued Samsung and won an injunction to have the device (temporarily) removed from Google Play.  This was a significant move as Google is counting on the Galaxy Nexus, which utilizes the Android Ice Cream Sandwich operating system, to boost end-of-Quarter sales.  While many of the fights over patents have been convoluted, mean, and ultimately unprofitable, two companies have decided to suspend hostilities over patents.  Yahoo! and Facebook announced late last Friday that they have declared peace on the patent front.

Before going after one another over patents, Facebook and Yahoo had been strategic allies in the tech sector.  Former Yahoo! CEO Scott Thompson, facing declining revenues last year, promised the Board of Directors that by going after Facebook for patent violations, the company could make money.  Turning on Facebook sullied the relationship Facebook and Yahoo! had and Facebook responded in kind to the attack.  But, with Thompson removed as Yahoo!’s CEO, talks began to reconcile the damaged relationship.

Facebook Chief Operating Officer Sheryl Sandberg and the acting CEO of Yahoo!, Ross Levinsohn hammered out an agreement that was announced last week.  An important component of the agreement was that both Yahoo! and Facebook would not attack one another using patent claims.  With their existing claims immediately dropped, the two companies entered into a new advertising partnership.  Given that advertising revenue is the key method Facebook uses to make money, a partnership with Yahoo! stands to increase Facebook’s revenue stream.  Yahoo! will benefit from the arrangement by more closely integrating Facebook into its platform.  Given how popular Facebook remains, the agreement essentially makes Facebook Yahoos wingman and Yahoo! hopes that the new arrangement will restore some of the company’s prominence in the United States.

Whether the gambit works for Yahoo! or not, both Facebook and Yahoo! took a mature step forward by reforming their alliance at a time when the rest of the tech sector seems to be in a free-for-all over patents.

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