Jew World Order

Facebook is paying Microsoft US$550 million in cash for a chunk of the patent portfolio that Microsoft recently acquired from AOL. Meanwhile, a revised S-1 filing with the US Securities and Exchange Commission has revealed the structure of the US$1 billion deal for Instagram.

The patent acquisition is all part of Facebook’s effort to fatten up its intellectual property war chest as it prepares to go public next month, and seeks to stave off potential litigation. It’s currently embroiled in a big patent fight with Yahoo, and, last month, Facebook struck a deal with IBM to purchase around 750 of its patents, which cover “software and networking” technologies.

Earlier this month, Microsoft spent more than US$1 billion to buy roughly 800 patents from AOL, and it’s now selling the majority of them to Facebook. Facebook is buying about 650 AOL patents and patent applications, and will also gain a licence to the 275 other patents and patent applications that Microsoft will continue to own.

“Today’s agreement with Facebook enables us to recoup over half of our costs while achieving our goals from the AOL auction,” Brad Smith, executive vice president and general counsel of Microsoft said in a statement. “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.”

In an interview with AllThingsD, Smith said, “We never felt it was necessary or even important for us to own all the patents.”

Ted Ullyot, general counsel for Facebook, said, “This is another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook’s interests over the long term.”

The deal solidifies a long-standing alliance between Facebook and Microsoft. In October 2007, Microsoft paid US$240 million in return for approximately 1.6 per cent of Facebook. As part of that deal, which broadened an earlier marketing arrangement, Microsoft would help sell internet ads for Facebook. At the time, the Facebook arrangement was seen as a way for Microsoft to counter Google’s increasing clout in the online advertising market.

The move also affords Facebook more protection, should other companies’ patent lawyers come knocking. In March, Yahoo sued Facebook, claiming that the social networking company infringed on 10 of its patents. Facebook, which denies the allegations, has since countersued.

Meanwhile, as Facebook continues its preparations to go public, the company lodged an updated S-1 form to the US Securities and Investment Commission overnight that reveals the numbers behind the US$1 billion deal to acquire photo-sharing service Instagram, revealing that Facebook is paying US$300 million in cash and the rest in stock.

The basic terms of the deal have been reported by The New York Times, but we now see the official numbers. In addition to the US$300 million in cash, Facebook is paying 23 million shares of common stock, valued at US$30.89 each. All told, that comes to about US$1 billion — although the value will vary, depending on what happens with Facebook’s stock once it goes public.

Facebook said in the document that its CEO Mark Zuckerberg wrote in the announcement when it did the deal that the company would run Instagram as an independent product to beef up Facebook’s photo product offerings and help increase the time mobile users spend on Facebook.

Already, more and more people are using Facebook via mobile devices, be it smartphones or tablets. The latest S-1 says that Facebook’s monthly active mobile users — people who access Facebook from a mobile device once a month — stood at 488 million in March. As of 20 April, that figure climbed past 500 million.

Luke Hopewell also contributed to this report.

Via CNET