Facebook has become a giant overnight, in much the same way Google did. Once upon a time, Apple was on the ropes. Now, it’s the most valuable tech company in the world. Obviously, the stage has been set for a series of fierce battles and bizarre alliances. All that’s missing is that initial spark to ignite the mayhem. Well, it looks like we’ve found it: intellectual property.
Yahoo! has a fairly hefty portfolio of patents, and many are related to search. If the company chose to use them offensively, according to Forbes, it could pull some hefty payouts from the likes of Google … and Facebook. So Yahoo!, something of an also-ran in the tech world these days (despite once having been at the top of the heap), may become incredibly important, especially as rumours of an acquisition swirl through Silicon Valley.
Here’s how it breaks down:
Google: this company dominates the search business, and it could benefit from the protection provided by these patents. Also, it sees Facebook as an important competitor, and probably wouldn’t mind (a) asserting its own ownership of the space while (b) throttling the social media start-up ahead of its IPO. Also, the lawyer formerly in charge of intellectual property at Yahoo! now works for Google, so there’s an inside track here that comes with many advantages.
Apple: Apple is the biggest tech company in the world (in terms of valuation). It loves patents, and it is doubtless concerned about the importance of Google in the online world. There have been rumours of Apple’s interest in Yahoo!, according to Forbes, which means the ‘old internet‘ company may have just become more attractive.
Microsoft: Microsoft is too big to be ignored, but it has struggled to find a way to win online. Of course, Microsoft keeps trying to find ways to steal a meaningful share of the search market from Google, which must make the prospect of acquiring Yahoo!’s intellectual property portfolio enticing. Also, there’s something Forbes didn’t mention: Microsoft has a position in Facebook. Picking up Yahoo! (or at least its IP) means protecting that investment.
Facebook: so, how does Facebook fit into all this? Well, the company does make some money on search, which means it could be affected by Yahoo!’s patents. Forbes says the social media giant is in a ‘vulnerable position’. It doesn’t have the cash to buy out Yahoo!, though it could try to partner with its investors to do so. Yet, would this be a smart move ahead of an IPO? A big acquisition would introduce a number of new moving parts, and Facebook doesn’t have deal-making down to a science, as it hasn’t seen much action. The likes of Google and Microsoft, on the other hand, do. Facebook will need either a stroke of luck or help from its friends.
For now, all of this is academic, as Yahoo! is still in control of its patent portfolio and seems to be sitting tight. Nonetheless, this is the sort of issue that could change everything for Facebook on little notice.