Microsoft Buys Over 800 AOL Patents for $1 Billion

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Microsoft said that it has agreed to buy more than 800 patents and a patent applications from AOL and pay $1.056 billion in cash for the rights to the inventions.

The money will also buy Microsoft a non-exclusive license to AOL's remaining 300 patents.

AOL previously announced its intentions to sell patents in order to raise cash. AOL reported Revenue of $2.2 billion and net profit of $13.1 million for 2011. The company said that it had about $408 million in cash available at the end of the year, down from about $802 million in 2010. AOL reported a loss of $783 million in 2010. The company's U.S. subscriber base dropped 15 percent from 3.8 million in 2010 to 3.3 million in 2011, while average traffic to its properties was down 4 percent from 112 to 107 million unique visitors per month.

“The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio,” said Tim Armstrong, AOL’s chairman and CEO, in a prepared statement. “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.”

Microsoft general counsel Brad Smith said that Microsoft was following AOL's patent portfolio for "years" and the purchase enables the company to own "certain patents that complement [Microsoft's] existing portfolio." The transaction is expected to be completed by the end of this year.

Speaking of a billion dollars, Facebook revealed that it has spent a similar amount to purchase Instagram.

Douglas Perry
27 Comments Comment from the forums
  • phamhlam
    Facebook buys Instagram for $1 Billion.
    Now MSFT buys AOL for $1 Billion.
    Man, people are getting loaded.
    Reply
  • applegetsmelaid
    3.3 MILLION people are still paying for AOL?
    Reply
  • classzero
    Even if I was forced to use dial up, I sure the hell wouldn't use AOL.
    Reply
  • goodguy713
    why do i keep thinking of doctor evil when they bring up the billion dollars.. lol its kinda hilarious .. and aol well ... i mean i guess if you live in the country thats probobly the best your going to get ... thankfully for me .. i can get at least 24Mbit here in indianapolis
    Reply
  • sykozis
    phamhlamFacebook buys Instagram for $1 Billion.Now MSFT buys AOL for $1 Billion. Man, people are getting loaded.Microsoft did NOT buy AOL. They bought patents that previously belonged to AOL. HUGE difference.

    applegetsmelaid3.3 MILLION people are still paying for AOL?Not even close. AOL switched their BYOA accounts from paid to free accounts. The only AOL users that actually pay for AOL, are those dumb enough to sign up for "premium services" that can be acquired for 10% of the cost separately....and those that are stuck on dialup. AOL has been surviving on ad-based revenue for almost a decade now.....and seemingly losing money hand over first since the merger with Time-Warner in 1998. Even splitting from Time-Warner doesn't appear to be saving them.
    Reply
  • jdwii
    In Michigan you can get free dial-up. In lots of areas people can only get dial-up/satellite internet. At my moms house its like that and every-time i visit i bring my 3G phone and get faster speeds then even Satellite internet.
    Reply
  • Parsian
    I hope MSFT didnt throw away cash for a dying company. But then again, they may have truly good patents that will become useful soon.
    Reply
  • Thunderfox
    I don't know what's worse. That Microsoft has 800 new patents, or that AOL has a billion dollars to keep it alive longer.

    The concerning things about AOL patents is that they must be pretty old, because AOL has not been relevant in a long time. Is MS trying to take ownership of some fundamental usage aspect of the internet? What could AOL have that MS would want badly enough to spend that much money on?
    Reply
  • JAYDEEJOHN
    I remember when AOL started, and wondered what is this?
    They werent even part of the web then, they tried pulling an Apple, but they should have talked to Adam first
    Reply
  • bison88
    Microsoft may not be the big well known dog like it once was since the Internet and technologies explosive growth in the past 10 years, but they're doing the right thing and securing their future. Just look at IBM. Their massive investments in R&D and patents make them incredibly powerful, also the services on the side don't help.

    Always a love hate thing with patents though, although I'm sure AOL has some very nice ones given its major influence in the early Internet days.
    Reply