AOL Buys Social Network Bebo for $850 Million

AOL today announced it is acquiring UK-based Bebo for $850 million. The social network is expected to complement one of AOL’s most popular services, the instant messaging system AIM. From the Bits blog:

As AOL has search for a growth strategy over the last decade, one of the biggest puzzles has been what to do about the AIM system, which allows anyone on any computer to send instant messages, whether they were paying AOL customers or not. Even as AOL’s access service declined, AIM remained the preeminent IM system in the United States, fending off competition from Microsoft, Yahoo, and later Google.

AOL has tried to out social network from AIM, but it was never successful. And Google now integrates AIM in its own chat system, taking advantage of AOL’s network of users. By buying Bebo, AOL now has its own social network which, when married with its robust advertising network (a result of a relatively recent buying spree over the past several months), solidly puts the company in the running with social network behemoths MySpace and Facebook, who are also still figuring out how best to monetize their vast user bases. Bebo has 40 million users worldwide and AOL says it is the third most popular social network in the U.S.

Search Engine Land notes that Yahoo had previously wanted to buy the social network. The company is a search and advertising partner to Bebo and has also been in talks with AOL about the possibility of merger, to avoid an acquisition by Microsoft.


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