AOL Buys Bebo for $850 Million

The deal follows months of speculation about a bidding war for the site.
Microsoft, Google, Viacom, the owner of MTV, and CBS, the US network which
recently bought a rival social network site Last.FM, have all been named
potential buyers.

AOL said it would use the acquisition to position itself in the burgeoning
market for internet advertising, and that Bebo's network of 40 million
mostly younger users was a highly attractive prospect for advertisers.

Rumors had floated over the past few months that Bebo, which has over 40 million members, was up for sale. Reports suggested a $1 billion price tag, but there were few hints as to potential buyers. Though Bebo had already partnered with AOL's AIM messaging client to facilitate friend-invite interoperability between the two services, even the most creative blogger speculation didn't seem to point to AOL eventually buying the social network.

Bebo, founded by British-born Michael Birch and his partner Xochi in 2005, claims to have around 40 million monthly users worldwide.

The surprise deal marks a major push by AOL to grow its social media business, which consists of AIM, a cross between messaging and social networking, and personal communications network ICQ.