Facebook (FB - Free Report) was sued by Blackberry (BB - Free Report) last week, but the good news is that it also managed to sign a broad licensing agreement with Warner (the only remaining music label) and an exclusive broadcast deal with MLB.
Blackberry Patent Case Against Facebook, WhatsApp, Instagram
Blackberry has sued Facebook and its WhatsApp and Instagram messaging units for alleged infringement of its mobile messaging technologies included in its BBM app that was highly popular at one point in time. The company has said in a 117-page complaint filed with the court last Tuesday that after years of dialogue, the company had finally decided to take the matter to court as “an obligation to our shareholders to pursue appropriate legal remedies.” The company is seeking an injunction to prevent Facebook from continuing to use the seven main technologies mentioned in the lawsuit as well as unspecified damages for lost profits.
According to Paul Grewal, Facebook's deputy general counsel, "Blackberry's suit sadly reflects the current state of its messaging business. Having abandoned its efforts to innovate, BlackBerry is now looking to tax the innovation of others. We intend to fight."
As Blackberry’s business moved away from handsets to focus on growing its licensing business, the company has grown aggressive at protecting its patents. To its credit, it has managed to extract $940 million from Qualcomm, secure ongoing patents from Cisco, settle with Canadian company Avaya and a Florida-based maker of low-cost mobile devices called Blu. Its case against Nokia for infringement of its 3G and 4G patents is pending at a Delaware federal court.
Facebook has signed on Warner Music, the third and only remaining music label for a broad licensing agreement covering all user-generated video using its published and catalogued music across Facebook, Instagram, Messenger and Oculus. WhatsApp is excluded for now. It has a similar agreement with ICE to get indie music on board but Merlin has yet to sign on. Copyrighted video using unlicensed work will, however, continue to be removed.
The goal with these licensing agreements is to unlock the potential in user-generated video, because every time it happens, creators and songwriters will get to make money. Moreover, that’s the way music is enjoyed in the digital world. Facebook is also likely gearing up to becoming a music streaming company in its own right.
Facebook Baseball Deal
Facebook has signed a deal with Major League Baseball (MLB) to exclusively air 25 weekday afternoon games to U.S. users via the MLB Live show page on its Watch tab. Recorded broadcasts will be available to international users barring some markets. Being its first digital-only shows, the games will be produced by the MLB Network with special effects and interactive and social elements from Facebook Watch.
Highlight shows, weekly recaps of the 30 teams and other special shows will also be produced by MLB for broadcast on Facebook. A person familiar with the matter told the AP on condition of anonymity that Facebook is paying $30-35 million for the shows. Last year, Facebook streamed 20 baseball games, but these included Friday night games, which are of course more popular.
Facebook is bringing video chat to its Messenger Lite app, originally designed for developing markets where connectivity is less consistent and later taken to the U.S. and UK. Usage however remains highest in emerging markets, with India, Brazil and Indonesia reportedly accounting for most of the 100 million installs from the Google Play Store.
The main Messenger app, which has been installed 700 million times, is most popular in India, Indonesia, U.S. and Brazil in that order. Video is a natural progression for chat services and Facebook itself has seen the number of video chats on its main Messenger app doubling from 2016 to 17 billion in 2017. So this could be what it’s doing to drive usage of the lighter, faster-loading app.
Janos Lazar, the top aide to Hungarian Prime Minister Viktor Orban, who was recently called a racist by the U.N. human rights chief, accused Facebook of censorship after it removed one of his posts. The post blamed immigrants for increased crime in Austria and raised the concern that they were pushing "white Christians" out. Lazar also said, "If we let them in and they are going to live in our towns, the result will be crime, poverty, dirt and impossible conditions in our cities." In retaliation, the Social Democratic Party (SPO) of Austria, which currently rules in coalition with the Greens, called his concern a "racist and xenophobic election strategy."
Facebook restored the post and offered a statement: "People use Facebook to challenge ideas and raise awareness about important issues, but we will remove content that violates our community standards, including hate speech. Exceptions are sometimes made if content is newsworthy, significant or important to the public interest."
Facebook-owned Onavo has launched an app called Bolt App Lock for Android that allows you to lock down an app you want to keep private because it contains personal or payments information or any other reason using a PIN code, pattern, or your fingerprint. But users concerned about their privacy had better be aware because at the bottom of the app's listing on Google Play, it says that "we collect info about your mobile device and the apps installed on it" and “Because we’re part of Facebook, we also use this info to improve Facebook products and services, gain insights into products and services people value, and build better experiences.”
Facebook has a Zacks Rank #2 (Buy). Peers with a buy rating include 21Vianet Group (VNET - Free Report) , Akamai Technologies (AKAM - Free Report) and Internap Corp. (INAP - Free Report) . You can also see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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