Yahoo Plays The Mean Girls Game With Facebook

Let’s face it, if you’re Yahoo, you’ve got to be hurting. From failed ad campaigns, to their former swear like a sailor CEO being chastised for announcing her termination…via iPad, to dusted acquisitions both as the acquirer and the acquired, the once purple people connecting behemoth has taken its fair share of lumps including a revenue slide that took out a fifth of their revenue. It’s like Wall Street and the Tech Community are the antagonists in Mean Girls and Yahoo is Lindsay Lohan (did I really just use that analogy?).  So I can only speculate based on the most uneducated opinion I could seek (mine),  but maybe this weeks announcement that Yahoo was prepared to wage war against Facebook through the wonderfully knot tying black suckubus known as the patent legal system reeks of a company willing to use any means necessary to remain a twinkle in the eye of the investment community, as some have speculated. By threatening litigation against Facebook, Yahoo could be “trying to send a signal to the deals market about the strength of its entire patent portfolio” according to a Reuters article published in TODAYonline. Mr Ron Laurie, a specialist in IP and investment banking with Inflexion Point Strategy mentioned that this tactic is a low risk way of accruing acquisition value.

Facebook Feels What It’s Like To Be Burned By Monty Burns

You’ve got to be flabbergasted if you’re Facebook right now. But what do you do? Do you go tit-for-tat and dive into the same patent locking strategy in a countersuit? Probably unwise. According to a United States government database, Yahoo has over 3,300 patents and published patent applications, while Facebook has 160.

Do you shut them out from the open graph? Now that’s interesting. You could argue that Facebook saved Yahoo’s bacon in bringing a new demographic to them, as the open graph news aggregation increases awareness of Yahoo’s content and subsequently click throughs. Yet if we bring this conversation full circle, it’s Yahoo who owns the Pay-Per-Click patent so who are we fooling here?

There are some, like Mark Cuban that want to see this end in a bloody mess. Who believe the scorch and burn fallout of the panel litigation might be a large enough sum to change the entire landscape of patent law. I for one was indifferent. Is this really a big enough issue that it’s going to impact me? Some in the tech space believe so. Fred Wilson’s post is convincing as he pretty much says that Yahoo, from this point forward, is dead to him.

But again. This is me. I’m selfish. Why do I give a flying french fry over two megalords dancing in the squared circle of patent law? Well it was pointed out to me by an acquaintance of mine – someone I’ve spoken to for years, with deep knowledge of both companies and who sits on a level that can go deep enough where his insights are 9 times out of 10 going to be correct painted an ugly picture.

Me: People aren’t going to care. Only reason is if you see immediate job loss as fallout due to patent claims. If mom and pop stores can’t use Facebook, if Facebook’s ad sales team gets canned…that’s it. Hurt needs to come on a local level for it to make it relevant.

Him: The rumors will be that Facebook will either close or have to charge everyone to use it in order to pay a Yahoo patent judgement. The news media will go NUTS over it. Legal experts will say its unlikely but possible because of treble damages.

Me: GTFO. Easy fix. Increase the cost of ad units to supplement the need to pay the piper for the patents.

Him: No. because one of the patents is for PPC. So it would have to be a settlement. And there is a slight chance the settlement could be 10B plus.

And then the money shot…

Him: But the fun part will be if they go after Google +

It hit me harder than a high school breakup on Facebook, as I read Executive Editor for CNET, Paul Sloan’s article on the whole ballyhoo and why I think he’s spot on. An end result of the strategy implemented by Yahoo could be forcing Facebook’s hands to actually buy out the patents before their IPO. This is an IP acquisition and one that could put Facebook in the driver’s seat if it were to roll out the same feet to the fire methods of patent twistedness that they’re being subjected to currently if/when it would go after Google.

Wow, that’s conniving. That’s just plain…mean…

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