Recent media attention may have been concentrating on AOL's talks with Yahoo! but the veteran web portal has just announced it is to buy social networking site Bebo for $850 million (£417 million) in cash.The sum paid for Bebo by AOL, now a division of Time Warner, may seem tiny to some; after all, last year Microsoft bought just 1.2% of Facebook for a huge $240 million. But Bebo is no insignificant player in the social media world.
Research by comScore suggests that Bebo is the second most popular social network in Britain. And, according to the BBC, Bebo is the third biggest social networking site in the USA, coming just behind Facebook and MySpace. Altogether, the social network boasts 40 million members worldwide, each of whom view an average of 78 pages each day.
Many industry commentators have been speculating over who would buy Bebo for some months, even before AOL started talks with the site in September last year. Previous contenders have included Microsoft, Google and even Yahoo! - though current troubles most likely put the latter out of the race.
Randy Falco, AOL Chairman and CEO, commented:
"Bebo is the perfect complement to AOL's personal communications network and puts us in a leading position in social media.
"What drew us to Bebo was its substantial and fast-growing worldwide user-base, its vision of a truly social web, and the monetization opportunities that leverage Platform-A across our combined global audience. This positions us to offer advertisers even greater reach and marketers significant insights into the desires and needs of consumers."
AOL is clearly trying to transform itself back into a serious contender in the field of search and social media. Last week, the pioneer web portal announced its plans to launch at least 12 new websites in the next six months.
What's more, in February, AOL made two key acquisitions: buy.at, an independent affiliate network, and Goowy, a widget technology start-up that specialises in widget development and analytics applications.
But following the purchase of Bebo (if it passes competition watchdogs in the US and EU, that is), can Yahoo! still expect AOL to rescue it from the jaws of Microsoft? Stan Schroeder, posting on Mashable, thinks it's still a possibility. He claims:
"Since the speculated AOL-Yahoo deal was supposed to be a merger, and since Yahoo doesn't' have a product that's directly competing with Bebo (if you don't count Flickr, which is not a general-purpose social network) the fact that AOL just bought Bebo doesn't really mean that there's no way for this deal to happen. However, it definitely complicates things and I would say that the AOL-Yahoo deal now seems less likely than before."
AOL has certainly got itself noticed over the first quarter of 2008 - but whether or not it can maintain this momentum throughout the year is another question entirely. However, with Bebo - and perhaps Yahoo! - at the helm, the web veteran could finally pose a serious threat to Google's dominance.
