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AOL is furiously trying to break the bounds of its decaying empire, and it just might succeed in doing that.

But the price, my friends, is high. AOL announced that for $850 million. Bebo is one of those social networks usually placed in the “middle tier.” It’s no MySpace or Facebook, but is strong and global and is among the most popular social networking communities in the UK, Ireland, and New Zealand. It also claims to be #3 in the U.S.

Rupert Murdoch, of course, was ridiculed several years ago for purchasing MySpace for $500 million, a seemingly outrageous sum at the time. But MySpace was and in fact still is the dominant player in the space so today the deal looks to be a relative bargain that will bring Murdoch and company great fortune.

AOL for its part will place its future in the hands of its AIM instant messenger, the dominant product in its space and, now, Bebo as well.

Interesting quotage:

: “AOL is clearly putting a massive effort into transforming the company from a dial up broadband provider into a company that has the competitive fire. The opening of AIM, mentioned above, is just one indication. The company has been releasing genuinely innovative new products and has also made a number of smaller strategic acquisitions over the last year or so.”

: “AOL is talking some gobbledygook about marrying AIM, ICQ with a real social network. Whatever!”

: “As big as this news is by itself, the question that arises is: what does this mean for the Microsoft-Yahoo-Google-AOL love rectangle?”

: “VC firm Balderton Capital will reap about $140 million – nine times what it invested in Bebo less than two years ago – by selling its 15.7 stake in the social net to AOL.”

: “Bebo had been in the market for new funding to support acquisitions, particularly in the contextual and behavioral search markets. But that ended once acquisition offers began coming in. No comment on earlier reports that Yahoo was an interested suitor (which is now 0-for-2 on such efforts).”

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Date
March 13th, 2008

Author
Eric Berlin

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