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AOL sells Bebo site after just two years of ownership

Jen — Fri, 18 Jun 2010 06:38:07 +0000

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.

Bebo to be shutdown by AOL

Andre — Thu, 08 Apr 2010 09:40:16 +0000

The massive rise of Facebook has had huge implications for the internet as a whole, many of the biggest companies have made specific changes to their services to either accommodate or compete with the social networking giant, but this meteoric rise of Facebook is inevitably going to cause some casualties.

Two years after AOL purchased social networking site Bebo for close to $1billion (£550 million) they are planning on either shutting it down or selling it if they can find a suitable buyer.

AOL sent an e-mail to Bebo’s 40 remaining employees this week outlining the situation:

“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.”

As a result of this, the UK based company is now actively looking for potential buyers to prevent a shutdown. Many of the employees have already been let go as all 30 staff members at the UK office in central London have been made redundant after the offices were closed at the end of April.
This eventuality has been forecast for sometime as Bebo’s figures have taken a dramatic nose dive this year. As of February 2010 the number of visitors to the site has dropped from 40m a month worldwide to a meagre 12m.

Many have blamed AOL for Bebo’s unfortunate reversal in fortunes as it is claimed that they often did not listen to any user feedback or partake in any market research in order to keep up with Facebook and improve the service. Instead they poured all of their resources into improving their AIM instant messaging program.

Facebook will be pleased.