As patent wars continue to rage in the smartphone world, industry attention has swung sharply in the direction of social media. Facebook and Yahoo are the latest technology giants to lock horns, and the results could change the way we all interact online.
Yahoo, one of the original internet giants founded in 1995, are suing Facebook over claims that the social network has infringed on many Yahoo patents. Yahoo hold thousands of patents and were among the first companies to develop sophisticated advertising and social technologies. Many of the patents hinge on code used to customise news feeds and advertising on a per-user basis, or giving different users different permissions.
The compensation they want is substantial: damages at three times face value, interest on damages, legal costs and the prohibition of any further use of the technologies by Facebook. This would effectively render Facebook to be completely useless as a social networking tool.
Critics say that Yahoo is ‘trolling’ Facebook: causing trouble and pinning the blame for its own failures on a third party. The two companies have formerly joined forces to implement cross-site tools that take advantage of both companies’ key features, and people in the technology industry have suggested that companies tend to accept cross-pollination: ideas are shared, recycled and developed as the internet grows, and have been for many years. Until now, Yahoo seem to have been happy with that arrangement.
Facebook representatives said Yahoo’s actions were “puzzling”, but many analysts say that the legal action is likely to have been carefully timed: Facebook is about to float on the US stock exchange, and the company bosses are unlikely to want to enter into any legal battles before that happens. Yahoo did exactly the same thing with Google in 2004: they settled out of court in return for a massive amount of shares in Google, right before Google was floated. Yahoo began to struggle financially four years ago, but rejected a buy-out offer from Microsoft only to be valued at half the value within a year.
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