Facebook to pay over Sh46bn to Microsoft

SAN FRANCISCO, Tuesday

Facebook struck a $550 million deal on Tuesday to get its hands on hundreds of AOL patents from Microsoft as the social network hardened its defences before it goes public on the Nasdaq.

Facebook will pick up around 650 of the 925 patents Microsoft bought earlier this month in an auction from AOL in a nearly $1.1 billion deal, Facebook and Microsoft said in a statement.

Facebook’s general counsel called the move “another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook’s interests over the long term.”

“The agreement with Facebook enables us to recoup over half of our costs while achieving our goals from the AOL auction,” added Microsoft executive vice president Brad Smith.

Facebook also arranged to licence the remaining 275 remaining patents or applications in the portfolio being bought by Microsoft, which gets the right to use the patented technology going to the California-based social network.

“Today’s agreement with Microsoft represents an important acquisition for Facebook,” said the social network’s general counsel Ted Ullyot.

While the companies did not disclose specifics on the patents, AOL’s trove of intellectual property is believed to include technology for messaging, search, imaging, and Internet telephony.

Facebook is expected to go public next month in a much-anticipated stock market debut.

The company will trade on the technology-heavy Nasdaq exchange under the symbol “FB,” it said in a filing with US regulators.

Facebook in February filed to go public and could raise as much as $10 billion in the largest flotation ever by an Internet company on Wall Street.

The paperwork filed for the initial public offering provided the first glimpse of the financial details of the Web giant launched eight years ago by Mark Zuckerberg from his Harvard University dorm room.

Facebook amended its filing on Monday to report quarterly profit slipped to $205 million despite a surge in revenue as it bumped up research and promotion expenses ahead of its stock market debut.

Facebook has also been incurring the cost of shifting operations to a former Sun Microsystems campus in the California city of Menlo Park.

Facebook said that net income in the quarter ended March 31 dipped from the $233 million logged in the same period last year despite revenue vaulting to $1.06 billion.