Facebook Spends $1 Billion on Instagram, Microsoft on AOL Patents
Article by George Norman
On 10 Apr 2012
Incredibly popular social networking site Facebook has recently announced that it will spend approximately $1 billion to acquire the fun photo-sharing app Instagram. The $1 billion transaction, part cash and part Facebook shares, will close later this quarter.

The Instagram team will join the Facebook team, founder and CEO Mark Zuckerberg explained. Everyone on the team will work on offering Facebook users the best photo sharing experience, will focus on building similar features that Instagram has to offer into Facebook. The Instagram app will not be discontinued. Facebook explained that it will work on improving this already very good app and it will focus on making the already quite popular app even more popular.


“This is an important milestone for Facebook because it's the first time we've ever acquired a product and company with so many users. We don't plan on doing many more of these, if any at all. But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together,” said Mark Zuckerberg on his Facebook timeline.

Moving on to Microsoft, the Redmond-based software giant also made a $1 billion acquisition. Microsoft entered an agreement with AOL to purchase 800 of AOL’s patents and AOL’s related patent applications. For the price of $1.056 billion cash, Microsoft will get a non-exclusive license to the patents retained by AOL. Once the deal goes through (it’s expected to be completed by the end of 2012), AOL will still have 300 patents and patent applications related to advertising, search, and other technologies.

“This is a valuable portfolio that we have been following for years and analyzing in detail for several months,” said Brad Smith, General Counsel and Executive Vice President, Legal and Corporate Affairs, Microsoft. “AOL ran a competitive auction and by participating, Microsoft was able to achieve our two primary goals: obtaining a durable license to the full AOL portfolio and ownership of certain patents that complement our existing portfolio.”

“The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio,” said Tim Armstrong, AOL’s Chairman and CEO. “We continue to hold a valuable patent portfolio as highlighted by the license we entered into with Microsoft. The combined sale and licensing arrangement unlocks current dollar value for our shareholders and enables AOL to continue to aggressively execute on our strategy to create long-term shareholder value.”

Tags: Facebook, Microsoft, Instagram, AOL, acquisition
About the author: George Norman
George is a news editor.
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Facebook Spends $1 Billion on Instagram, Microsoft on AOL Patents
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