Bebo social network acquired by AOL

AOL, Time Warner’s Internet arm, announced Thursday it will buy social network Bebo for $850 million in cash, giving the 40-million member website newfound support to compete against MySpace and Facebook. Bebo trails the two in North America but is number one in Britain, Ireland and New Zealand. AOL has big plans for Bebo in 2008, launching it in five more countries as part of its plans to expand globally. In general, AOL is aiming to expand into more than 30 new countries this year.

AOL is following in the footsteps of other media conglomerates such as News Corp. and Microsoft, whose investments have paid off. MySpace was bought by News Corp. in 2005 for $580 million, while Microsoft bought 1.6 percent of shares in Facebook last year for $240 million. Both MySpace and Facebook are now estimated to be worth at least $15 billion. In the past few months, the Time Warner division spent nearly $1 billion on online advertising companies.

Bebo employs close to 100 in offices based in the UK, San Francisco, CA and Austin, TX. Bebo President Joanna Shields will remain in her post but will now report to AOL President and CEO Ron Grant.

Global ad spending on social networking websites is estimated to total $2.1 billion in 2008, a 75 percent increase over last year, according to analyst group eMarketer.

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