June 18, 2010 by Jen
Internet giants AOL have sold the social networking site Bebo after owning it for just two years. In a surprising move, the company has sold the site to small private investment company Criterion Capital Partners.
In 2008, AOL purchased Bebo for $850m (then £417m). Since then the site has struggled to compete with Facebook, which is the most popular online networking site globally. When Bebo was developed, it targeted a younger generation of surfers than Facebook, but since Facebook has evolved to be more inclusive for all users.
Criterion Capital Partners have not revealed how much they have paid for the site, although it is thought that it must have been sold for a fraction of the amount which AOL purchased it for. AOL have commented that they chose to sell Bebo as they were unable to provide the significant investment required to prevent it from failing as a business.
Technology experts are terming the decision by AOL to purchase Bebo disastrous. AOL have been criticized for making a poor decision, long after internet entrepreneurs should have learned from the initial mistakes made at the time of the dotcom crash.
Michael Birch, founder of Bebo, is thought to have walked away from the deal with AOL with $300m. This demonstrates that much online trading comes down to fortuitous timing.
It is not yet known what Criterion Capital’s plans for Bebo are, and they have not released any details about the future prospects for the site. Bebo’s headquarters are set to remain in San Francisco, and their will potentially be job losses as a result of the sale. Adam Levin, Criterion Capital’s managing partner, says there is plenty to be positive about; “The young, highly active user base, revenue history, presence in countries throughout the world and solid technical infrastructure make it an attractive media platform,” he said.
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