AOL to shut or sell Bebo social networking site

Internet services giant AOL has announced it will sell off or shut down social networking site Bebo, just two years after buying the site for a staggering $US850 million.

AOL told staff today that it could no longer afford to funnel cash into the site, which has fallen well behind the social networking industry leader Facebook.

According to the web analysis company comScore, Bebo had 12.8 million visitors in February, down 45% on the year before.

By comparison, Facebook’s visitor numbers soared 68% to 462 million.

AOL acquired Bebo from its British co-founders, Michael and Xochi Birch, in March 2008. While the site was popular in Britain, AOL hoped it would grow rapidly in the crucial US market, helping AOL access a new group of users and advertisers.

But AOL has now lost patience.

“It is clear that social networking is a space with heavy competition, and where scale defines success,” a memo to staff said.

“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 has given itself until May 31 to decide the fate of Bebo, although commentators have suggested it will be extremely difficult to attract buyers.

AOL is also trying to sell its ICQ instant messaging tool, although it appears it has more chance of getting this deal away. According to a report from Reuters, Russia-based ProfMedia and Digital Sky Technologies, and China-based Tencent Holdings are interested in the ICQ business.