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Visitors watch a presentaiton of fetaures of the new Windows 8 operating system at the Microsoft stand on the first day of the CeBIT 2012 technology trade fair in Hanover, Germany. Microsoft announced that its selling $550-million worth of former AOL patents to Facebook.
Microsoft recently beat out Facebook for the right to purchase 925 patents and patent applications from AOL. The winning bid? $1.6 billion. But now Microsoft has turned around and essentially flipped a large portion of that patent portfolio, and the buyer is...Facebook!
In the context of a declining stock market and problems in Europe, Facebook — and more accurately, Facebook's investors — has to be getting worried about its upcoming IPO, which is supposed to be able to value the company at $100 billion. The Instagram purchase was stage one. Now comes this big patent buy, with Facebook paying for $550-million worth of patents that Microsoft evidently doesn't really need.
That said, you could argue — as CNET's Paul Sloan implies — that Microsoft was just doing Facebook a nice, big favor by leveraging its balance sheet to vacuum up the AOL patents, sparing Facebook the need to spend any of its own cash. Microsoft is nowhere in social media, so a "long-standing alliance" with Facebook makes sense, as both companies pitch in to weaken Google.