WORKING IT OUT: Facebook and Yahoo have settled their months-long patent dispute, averting a potentially lengthy battle over the technology running two of the Internet's most popular destinations.

NEW DEAL: In dropping the lawsuits, the companies agreed to license their patents to each other. They also formed an advertising alliance that expands their existing partnership. No money will exchange hands in the settlement.

FRIENDS? The advertising deal could help Yahoo recover some revenue that it has lost as marketers shift more spending to a larger and more engaged audience on Facebook's online social network. Facebook, in turn, gets to show ads tailored to its 900 million users in other heavily trafficked areas besides its own website.