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AOL Decides to Unfriend Bebo

In an email message to employees, AOL Ventures executive VP Jon Brod announced that the recently independent and slimmed-down AOL is looking to either sell its social networking property Bebo…or shut it down entirely. Although never a huge presence in the North American market, Bebo at one point was a top social networking service in the Ireland, New Zealand, and the United Kingdom, and was considered to have some of the most-engaged users in the social networking world. So engaged, in fact, that AOL payed a whopping $850 million to acquire Bebo just over two years ago. But Bebo has faced difficulty competing with social networking juggernauts like Facebook and Twitter, and AOL has decided to cut Bebo loose…or through in the towel.

“Bebo, unfortunately, is a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space,” Brod said in his message to employees. “AOL is committed to working quickly to determine if there are any interested parties for Bebo.”

Although AOL’s original acquisition of Bebo was greeting with more than a little skepticism, AOL had been hoping to meld Bebo’s social networking tools and technologies with its own AIM and ICQ properties to create a compelling online social experience that would appeal to a variety of markets—particularly North America—and serve as a revenue driver for AOL’s online advertising business. Instead, Bebo has been losing U.S. users as they migrate to Facebook and other social networking services. According to Comscore, Bebo has about 5.8 million users in the United States in early 2009, but that’s down to just over 5 million in February. In comparison, Facebook currently boasts over 200 million U.S. users.

Industry watchers believe that if AOL is able to turn up a buyer for the service, Bebo will bring in only a fraction of the $850 million AOL paid for it in 2008.

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