Yahoo And Facebook Set Aside Their Differences To Form New Partnership

Yahoo today announced that it is dropping its patent lawsuit against Facebook and engaging with the social network in a new partnership.

The deal ends litigation between the two parties over several patents that lie at the heart of either's companies. Yahoo sued Facebook in March claiming infringement of ten patents, and saying "Facebook's entire social network model … is based on Yahoo!'s patented social networking technology." Facebook quickly fought back with a counterclaim accusing Yahoo of infringing ten patents of its own, most of which Facebook had just acquired from other companies and sources.

Here's the official release:

SUNNYVALE AND MENLO PARK, CALIF. - JULY 6, 2012 - Yahoo! (NASDAQ: YHOO) and Facebook (NASDAQ: FB) today announced that they have entered into definitive agreements that launch a new advertising partnership, extend and expand distribution arrangements, and settle all pending patent claims between the companies.

Under the agreements, which include a patent portfolio cross-license, the parties will work together to bring consumers and advertisers premium media experiences promoted and distributed across both Yahoo! and Facebook. Yahoo! and Facebook will also work together to bring Yahoo!'s large media event coverage to Facebook users by collaborating on social integrations on the Yahoo! site.

"We are excited to develop a deeper partnership with Facebook, and I'm grateful to Sheryl and her team for working hard together with our team to develop this dynamic agreement. We are looking forward to building on the success we have already seen to provide innovative new products and experiences for both consumers and sponsors," said Ross Levinsohn, interim CEO of Yahoo!. "Combining the premium content and reach of Yahoo! as the world's leading digital media company with Facebook provides branded advertisers with unmatched opportunity."

"I'm pleased that we were able to resolve this in a positive manner and look forward to partnering closely with Ross and the leadership at Yahoo!," said Sheryl Sandberg, Chief Operating Officer at Facebook. "Yahoo!'s new leaders are driven by a renewed focus on innovation and providing great products to users. Together, we can provide users with engaging social experiences while creating value for marketers."

Since the launch of the original multi-year partnership between Yahoo! and Facebook that allows users to discover and connect news and information on Yahoo! sites and share them with their Facebook friends, Yahoo! has integrated the feature called "Social Bar" on more than 100 of its properties globally, and more than 90 million users have implemented it. As a result, Yahoo! has the largest active user base among all news sites that have integrated with Facebook's Open Graph platform, making Social Bar the world's leading social news application.

Going forward, Yahoo! and Facebook have agreed to work more closely and collaborate together on multiple tent-pole and anchor events annually over the next several years to provide unparalleled experiences for consumers and world-class sponsorship opportunities for advertisers.

In brief we shouldn't expect a conglomeration of the the two sites. Rather the agreement will mean you'll see more Facebook integration into Yahoo' services, more advertising sharing and possibly some collaboration down the road on new projects.