Yahoo is accusing Facebook of infringing on its patents and threatening to sue if the world's largest social network doesn't agree to pay licensing fees.
The threat came by way of an emailed statement, first reported by the New York Times, in which Yahoo says the warning is simply a move to protect the struggling Internet firm's intellectual property, though others have speculated the motivation could be an attempt to drive up the company's value in the face of a possible takeover.
"Yahoo has a responsibility to its shareholders, employees and other stakeholders to protect its intellectual property," Yahoo said in a statement emailed to the Los Angeles Times. "We have invested substantial resources into these innovations. Recognizing that, other major web and technology companies have already licensed some of these technologies. We must insist that Facebook either enter into a licensing agreement or we will be compelled to move forward unilaterally to protect our rights."
Facebook, which has more than 800 million users worldwide, said in an emailed statement that it's still looking through Yahoo's demands.
"Yahoo contacted us at the same time they called the New York Times and so we haven't had the opportunity to fully evaluate their claims," Facebook said.
The patents Yahoo says Facebook is infringing upon cover different technologies that websites can use to handle user data, though Yahoo wouldn't say how many patents it accuses Facebook of violating.
The ultimatum comes as Yahoo takes on a new CEO in former PayPal executive Scott Thompson, looks for yet another turnaround strategy and searches for replacements for four board members, including Chairman Roy Bostock, who announced their pending resignations this month. Yahoo founder and board member Jerry Yang also left the company's board in January.
In 2004, ahead of its IPO filing, Google settled with Yahoo over patent infringement claims relating to targeted ads placed next to search-engine results. The settlement resulted in Google giving Yahoo 2.7 million shares of its stock, which at that time, before the IPO, were believed to be worth as much as $365 million.