AOL to pay $850M to advance its social networking plans

AOL is the latest Internet giant to buy its way onto the online and mobile social networking field.
The Time Warner Inc. subsidiary said it will shell out $850 million to acquire Bebo, a U.K.-based outfit that boasts more than 40 million users worldwide. Bebo claims to be the No. 1 community site in Ireland and New Zealand; the company’s U.S. traffic ranks third behind MySpace and Facebook.
The move follows News Corp.’s 2005 takeover of MySpace and Microsoft Corp.’s $240 million investment in Facebook. And just like those higher-profile deals, AOL’s buy-in is sure to have an impact in mobile: While it’s been chided as a “Web 0.1” antique, AOL has consistently ranked among the top mobile Web destinations, and the company made a bold move with last year’s acquisition of Third Screen media. AOL also recently reached out to third-party developers, opening its popular AIM messaging network for PCs and mobile phones, and late last year the company introduced a new, customizable wireless portal.
Bebo, meanwhile, has quietly built up a following of mobile users in the United Kingdom and other markets, and recently announced a tie-up with Intercasting, a pure-play mobile social networking company. Intercasting is chasing MySpace and Facebook in mobile as well as a host of wireless-focused startups such as Jumbuck, AirG, FunMobility, Tapatap Inc., Frengo Corp. and IceBreaker Inc.
AOL said it plans to monetize Bebo’s online and mobile traffic via Platform-A, an ad-serving network built on the technology of Third Screen, Tacoda, ADTECH AG and other acquisitions made during its recent $1 billion spending spree. Bebo President Joanna Shields will continue to manage the business and will report to AOL COO Ron Grant.
“Bebo is the perfect complement to AOL’s personal communications network and puts us in a leading position in social media,” said AOL CEO Randy Falco. “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.”