Microsoft outbid Facebook for AOL patents (rumor)

Facebook also wanted the 800 patents AOL was selling, but Microsoft won the bidding war, according to a new rumor. There's still a chance, however, that Facebook will get the patents it wants.

Update - Why Facebook is buying 650 AOL patents from Microsoft

Last week, Microsoft bought over 800 patents from AOL for $1.056 billion on the same day that Facebook acquired Instagram for around the same amount. Now, we're hearing Facebook bid on the patents as well, but obviously didn't win, according to two people with knowledge of the matter cited by Bloomberg.

Facebook COO Sheryl Sandberg reportedly led the negotiations to acquire AOL's patents. She wasn't willing to offer enough money though. Unsurprisingly, both Facebook and Microsoft declined to comment on this rumor.

Here's the interesting part. Microsoft reportedly intends to sell most of the newly acquired portfolio because it doesn't consider all of the 800 patents valuable to its patent portfolio. In other words, Facebook could still get some of the patents it was after. After all, the two companies are more friends than enemies.

In October 2007, Microsoft bought a 1.6 percent stake in Facebook for about $240 million, giving Facebook a valuation of $15 billion. Ever since then, the two companies have been best friends and have worked together on many different products, although now it's just mainly Bing (see links below). Microsoft even provided display ads for Facebook at one point, but that deal has since expired and Facebook now competes with Microsoft in the online advertising market, and now Microsoft is paying Facebook for ads.

We recently heard Facebook beat Twitter to Instagram. You can't win them all. In this case though, assuming Microsoft doesn't want the same patents Facebook does, Menlo Park may be able to still get what it wants, just from Redmond, not New York City.

Facebook has always been looking to beef up its patent portfolio, but with public companies like Yahoo and Mitel targeting it for patent infringement, the social networking giant has stepped up its game. Facebook's most recent purchase has been some 750 patents from IBM.

Update - Why Facebook is buying 650 AOL patents from Microsoft

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