Yahoo is shaking down Facebook over patents.
Waving pieces of paper around, Big Purple’s lawyers are claiming that Yahoo invented key aspects of Facebook’s advertising, social networking, and communications technologies.
These lawyers are telling Facebook to pay up or face a lawsuit.
We’ve already gone over how this is a dishonorable thing to do. Yahoo has no claim over the invention of social networking.
Now let’s go over how this might also be a stupid thing for Yahoo to do.
Yahoo’s media business is actually very dependent on having a friendly relationship with Facebook. ComScore can’t measure how much traffic Facebook sends Yahoo, but it can tell us that 11.4% of all visits to Yahoo sites in January 2012 were preceded by a visit to Facebook. This was second only to direct log-on at 14.8%. Much of that traffic is coming to Yahoo thanks to deep integrations with Facebook. When Yahoo News integrated Facebook’s “Open Graph” into its mobile site, traffic increased 3X in 10 days, reaching 1.5 million visitors.
Yahoo already has a morale problem and this will make it worse. Patent trolling is a grave sin in Silicon Valley, where it is rightly seen as an insult and injury to innovation. If Yahoo gets mired in a patent suit with Facebook, employees already eyeing the exits will only be more eager to leave. The suit will also make it hard for Yahoo to acquire startups, which sometimes resist big money from Big Purple just because it is viewed as a stodgy place to work.
For an idea of how damaging this pursuit could be to employee morale, check out how excited this Yahoo employee is about the idea of an integration with Facebook:
Yahoo’s problem isn’t cash – or eking it out from its old innovations. Yahoo fired CEO Carol Bartz last year because she was only good at one thing: squeezing profit growth from Yahoo’s flat revenues. When he was hired, new CEO Scott Thompson said he would grow new lines of business for Yahoo by turning to innovation. This is not product innovation. This is a cynical manipulation of a broken law. This is squeezing blood from stone.
The word in Silicon Valley is that new Yahoo CEO Scott Thompson is engaging in this patent trolling in order to placate activist shareholder Dan Loeb, who launched a proxy fight on Yahoo’s board earlier this year.
So when Yahoo puts out statements suggesting this pathetic patent ploy is about advancing the interests of Yahoo shareholders, employees, and users, remember that it is not.
Remember that it is about saving board members their second jobs.