AOL said early Monday that it is selling hundreds of patents to Microsoft Corp. for more than $1 billion. The news sent shares of AOL surging.
AOL agreed to sell more than 800 patents to Microsoft for $1.1 billion in cash. AOL also granted a non-exclusive license to Microsoft for the rest of its patents.
The remaining 300 or so patents in AOL's portfolio include software technologies related to advertising, search, social networking, mapping, streaming, and security.
Shares of AOL spiked 42% in early morning trading.
The deal represents a coup for basically everyone not named Google.
AOL walks away with some much-needed cash for patents it was no longer using. Microsoft gets to take home some of the first social networking patents ever granted, and Facebook -- a Microsoft partner -- is insulated from the legal attacks those patents could have aided had they ended up in enemy hands.
"Besides the two deal partners and shareholders, Facebook is the number-one beneficiary," said Florian Mueller, an independent intellectual property analyst and consultant. "An independent AOL or any other buyer would have picked Facebook as the first target, but Microsoft is a friend. Google once again missed out on a unique opportunity."
Google has made "social" its battle cry this year, putting a significant amount of engineering muscle behind its fledgling Google+ network. The company is in the midst of acquiring Motorola Mobility, which has a robust patent portfolio that could be used to protect Android -- but probably won't be of much help defending Google's social efforts.
Yahoo or Facebook would have been other likely buyers, but both are in unique situations that probably curbed their abilities to pay what Microsoft did for AOL's patent portfolio.
Yahoo is in the middle of a complete overhaul, while Facebook is in the process of offering its stock to the public. It's probably not looking to deplete its $3.9 billion cash stash on major acquisitions right now.
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