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Yahoo and Facebook settle dispute

Facebook and Yahoo have agreed to settle a patent dispute.

The agreement averts a potentially bitter battle over the technology running two of the internet's most popular destinations.

The companies are also agreeing to an advertising alliance.

The settlement involves no exchange of money and comes after a months-long patent squabble between the two internet icons.

The advertising alliance could help Yahoo recover some of the revenue that it has been losing to newer companies such as Facebook. For Facebook, the deal ends a potential distraction less than two months after it went public.

Although it has been growing at a robust pace, Facebook is still trying to win over sceptical investors. Its stock is trading below its 38 dollars (£25) IPO price.

The truce ends a conflict provoked by Yahoo's short-lived chief executive, Scott Thompson, who was dumped from the job two months ago after misinformation on his official biography raised questions about his integrity.

Under Thompson, Yahoo filed the patent lawsuit in March, wielding it as a weapon against a company that Thompson believed had been prospering from the ideas of its older rival. The complaint alleged Facebook infringed on 10 Yahoo patents covering internet advertising, privacy controls and social networks. Yahoo added two more patents to the lawsuit later.

But Thompson's attack on Facebook quickly turned into a public-relations disaster. Much of the technology industry railed against Yahoo's tactics. Critics viewed the lawsuit as a financial shakedown by a desperate company whose well of innovation had run dry.

When Yahoo replaced Thompson in May with interim chief executive Ross Levinsohn, it opened the door for the company to settle the dispute under a reshuffled board of directors. Six of Yahoo's 11 directors joined the board after Yahoo sued Facebook on March 12.


From Belfast Telegraph