Just two years after acquiring social network Bebo for $850 million, the newly-independent AOL has decided to abandon its social networking investment, either by selling it or simply shutting it down.
According to PaidContent, AOL sent a message to employees earlier today stating that it “is not in a position” to support Bebo:
“The strategy we set in May 2009 leverages our core strengths and scale in quality content, premium advertising and consumer applications, positioning us for the next phase of growth of the Internet. As we evaluate our portfolio of brands against our strategy, it is clear that social networking is a space with heavy competition, and where scale defines success. 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. AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking.”
AOL is committed to working quickly to determine if there are any interested parties for Bebo and the company’s current expectation is to complete our strategic evaluation by the end of May 2010.”
Despite early optimism about Bebo’s prospects, the message seems clear: AOL knows that the Bebo acquisition was a costly mistake. We knew that the company has been looking to sell Bebo for a while, but it may not be able to find a buyer that’ll make an acquisition cost-effective.
In the end, Bebo simply didn’t fit into AOL’s new focus on content, which could also see the company unload assets like ICQ in the months to come.