Yahoo, Facebook Reportedly In Ad Deal

Yahoo and Facebook have agreed to re-sheath their patent swords and play nice — at least for now.

The two companies have struck a broad advertising partnership as part of a deal to end a patent dispute, Kara Swisher reports on the technology blog All Things Digital, quoting "sources close to the situation."

According to the blog, the arrangement involves no exchange of money, but instead a deal for joint online advertising sales and cross-licensing of key patents.

Yahoo filed suit against Facebook in March, claiming the social media giant infringed on 10 of its patents dealing with advertising and privacy controls. Yahoo added two other patent infringement complaints later.

All Things Digital reports that the deal could lead to further lucrative advertising agreements between Yahoo and Facebook.

The Yahoo-Facebook deal stands in sharp contrast to the $550 million that Facebook paid to Microsoft to settle a similar dispute.

According to All Things Digital:

"Discussions to settle the lawsuits — negotiated by Yahoo interim CEO Ross Levinsohn and Facebook COO Sheryl Sandberg, among others — began almost as soon as Yahoo's board ousted former CEO Scott Thompson [who had] ... reportedly promised directors that a big financial payoff of many billions of dollars could result from the patent lawsuits against Facebook."

Meanwhile, The Wall Street Journal reports today that Levinsohn is short-listed as a permanent replacement for Thompson, along with Hulu CEO Jason Kilar.

The newspaper said that Yahoo "got to know and was apparently impressed with Kilar over the past year after attempting to buy all of Hulu last year."

UPDATE at 3:50p.m. EST:

Hulu, in an email to reporters, said Kilar isn't going anywhere:

"As has been reported, Jason Kilar has been a focus of the Yahoo CEO search committee. He has graciously declined to be considered," the company said.

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