Does Facebook Fit in With the AOL-Microsoft Friendship?

AOL (NYSE:AOL) closed a billion-dollar deal last week to transfer three-quarters of its patent portfolio to Microsoft (NASDAQ:MSFT). Over 800 of AOL’s 1,100 patents now belong to Microsoft, which also has a non-exclusive license to the remainder. AOL will also retain a license to patents it has sold.

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Microsoft is expected to use the new intellectual property in a deal with Facebook (NASDAQ:FB), building on a number of social networking inventions from AOL’s earlier days as a web platform. Facebook is expected to buy 650 of those social media-related patents for about $550 million, helping Microsoft recoup over half of its $1.056 million “while achieving [its] goals from the AOL auction,” Microsoft’s Ben Smith said in April. Microsoft will be holding onto patents covering advertising, search, mapping, security, and media streaming.

For AOL, the sale was about increasing its value to shareholders, and the company said it will do more in the future to “return more value to shareholders” and “create long-term shareholder value.” While AOL expects to release more details by month’s end, it did confirm that 100 percent of the proceeds from the sale will go back to stockholders.

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