The lawsuit by Yahoo comes in the wake of Facebook’s recent announcement of an IPO that could raise the value of the company to a staggering $100 billion. That hardly makes other competitors happy.
Facebook spokesman Jonathan Thaw stated that Facebook had come to learn of the suit only through media reporting. He said, “We’re disappointed that Yahoo, a longtime business partner of Facebook and a company that has substantially benefited from its association with Facebook, has decided to resort to litigation.”
In response, Yahoo issued an email statement claiming, “Unfortunately, the matter with Facebook remains unresolved and we are compelled to seek redress in federal court.” Last month, Yahoo had reported that it had asked Facebook to pay license fees over Yahoo patents and that other companies have already in the process of making such licensing deals. Apparently, the negotiations did not work out.
One of the first internet giants, Yahoo has recently suffered business decline by competition from Google and Facebook.
Experts said that Yahoo had set perfect timing for its lawsuits because Facebook can scarcely get into a legal fight now.
Colleen Chien, a professor at Santa Clara Law in Silicon Valley told Reuters that “As a general proposition, when a company is about to go public, the last thing it needs is to get involved in a knock-down, drag out litigation fight … So that might make Facebook more willing to resolve its differences with Yahoo.”
The Yahoo lawyers have shown such perfect timings to strike at business opponents even in previous instances. Nine days before Google went public in 2004, it was compelled to strike a deal with Yahoo for a license to Yahoo patents. Later Google absorbed a $201 million non-cash charge from the transaction.
The same law firm, Quinn Emanuel Urquahart & Sullivan which includes Google and Zynga inc. within its clients has been retained by Yahoo.
It’s clear that technology giants haven’t been too clear about their policies, access, and use of end user data, nor have they respected conventions and expectations. The number of lawsuits that have recently sprung up over data exploits, third party data storage, and distribution of end-user data harvested through different platforms like smartphones, tablets, and internet accounts has also propelled the government to think of legislation for ensuring privacy of end users. With companies having such dubious mores and principles being in control of the information technology scenario it is hardly surprising that they are going for each other’s throats. 2012 seems destined to be a milestone in the wars between technology oligarchs.