In case you haven’t read any news from the past year, Yahoo has been in something of slump. The former Internet titan has found itself completely obliterated in search, struggling to keep its apps afloat, and has played musical chairs with its executive branch (always a less-than-encouraging move).
All the while, Yahoo has denied it’s considering a sale. But clearly, something has to be done: the company is quickly losing market share and good faith was out the window awhile ago. So what is Yahoo going to do?
Well now we know: a good old patent shakedown. Earlier today, we heard that Yahoo will attempt to force Facebook into licensing “10 to 20 patents over technologies that include advertising, the personalization of Web sites, social networking and messaging.” Yahoo will argue that Facebook is infringing on this handful of patents, and the social network will have to either pay up or face court time.
And with that, Yahoo has officially jumped the shark. You may have thought that was when it made a mess of firing Carol Bartz, or when Jerry Yang resigned from his position with the company, or maybe even when that infamous neon Yahoo billboard was put out to pasture. But this is really it: the minute a company becomes a patent troll usually signals a last ditch effort to appease shareholders in the face of insurmountable obstacles.
Kodak’s sad end is still fresh in our memories. While the company itself will live on, its camera division has been shuttered — but a mere month before that announcement, it sued Apple and HTC for infringing on digital imaging patents. Nokia tried a similar tactic last year, shortly after the company was forced into restructuring, with the help of Windows Phone, due to its own dismal future prospects going it solo. And Ericsson (now folded entirely into Sony) made an attempt to sue ZTE for patent infringement. The results of all of these cases were different, but the companies met similar ends — merged into existing enterprises, hacking away at their own business sectors, or some combination of the two. Either way, it isn’t pretty and patent trolling didn’t work.
Yahoo’s case in particular doesn’t inspire confidence. We know that the company tipped The New York Times shortly before it even talked to Facebook about the threat of litigation, which makes it look like Yahoo is just trying to scare the social network into acting quickly and throwing some hush up money its way — especially considering Facebook’s still in its quiet period before becoming a public traded company in April. Facebook doesn’t want to scare investors and potential shareholders off with patent wars, which obviously can drain a company’s finances.
But does anyone else feel like Yahoo may have poked the bear here? Facebook might be in a precarious position for the next couple of months, but it has incredibly deep pockets and an impressive patent portfolio of its own. Even if Yahoo is able to get the settlement it’s (likely) desperate for and incredibly willing to take (lawyers are expensive — we’re guessing Yahoo would be more than happy to accept a nice piece of Facebook’s IPO money to go away), it’s not a sustainable path to longevity — not to mention the fact that the deep Facebook integration Yahoo currently enjoys could be gone, and future partnerships might be wiped off the table.
If the last few attempts at this route have revealed anything, it’s that it won’t work. You can only coast on others’ success for so long, and it usually paves the way to a sad end that mars the former innovation for which a tech company was once known.
Yahoo issued to this statement to us upon request for comment:
“Yahoo! has a responsibility to its shareholders, employees and other stakeholders to protect its intellectual property. We have invested substantial resources into these innovations. Recognizing that, other major web and technology companies have already licensed some of these technologies. We must insist that Facebook either enter into a licensing agreement or we will be compelled to move forward unilaterally to protect our rights.”