Could AOL’s purchase of Bebo threaten Facebook?

Sorry Mitch, I guess I’m going to be talking about the same thing as you. I had it half written when I noticed yours went up and I really don’t feel like choosing another topic and researching that one too. I guess if we have to write on the biggest news of the week there will be some overlapping anyway.

So the big news I’ve been hearing about is AOL’s purchase of the social networking website, Bebo. The price? $850,000,000. That’s a lot of zeros. Especially when AOL is slowly dying a painful and horrible *potential* death. I’ll go into a little more depth on both companies.

AOL (formerly America Online) was once mainly in the Internet Service Provider industry, with 30 million subscribers (down to 10.1 million as of Nov. 2007). Due to the dramatic decrease in dial-up (resulting in a decrease in their subscribers) the company has been trying to change their image to an Internet Content Provider rather than a service provider. As of February 2008, there was an announcement that AOL would split into two different sections: internet access and advertising. This is where the acquisition of Bebo comes in.

Bebo (Blog early, blog often) is a social media network (much like MySpace, Hi5, and Facebook) that has a substantial claim on the market. Although they aren’t quite as big as Facebook or MySpace in North America, it is extremely competitive in other countries, such as Britain and Ireland. It is actually the 66^th most popular English-language website (MySpace = 5^th, Facebook = 6^th, Hi5 = 8^th) according to Alexa Internet. *Sidenote: There are a few porn sites in the top 100, as well as Google having a bunch there too).

What makes this such a dangerous merger for other social networks is that AOL has the software that Bebo needs to grab top market share. AOL has the 10 million subscribers that could extremely benefit Bebo’s population, as well as the advertising software that Facebook has been struggling so much to make effective. With AOL’s AIM and ICQ potentially growing Bebo, and with Bebo a great site for mass advertising, this could be a great way for AOL to rebound and become one of the star online advertising companies.

A problem with this merger is that Yahoo runs the display advertising for Bebo in the UK and Ireland. If Microsoft is successful in the bid for Yahoo, what will be the outcome? Microsoft has put heavy support behind Facebook with their 1.6% purchase, so how can they justify a part of their company (if Yahoo is purchased) supporting the rival of their Facebook? Can Microsoft support two social networks?

Also, with Yahoo running the advertising display for Bebo, Google running the advertising of MySpace, and Microsoft running the advertising for Facebook, it makes the market pretty competitive. If Microsoft purchases Yahoo, then it gives Microsoft a great deal more advertising power, controlling both Facebook’s and Bebo’s advertising. Will this finally make Microsoft competitive with Google’s advertising power? I guess we will see in the coming months.

*UPDATE* Facebook has just announced that it will be having an instant message service built right into Facebook.  This is announced right after AOL has been talking about combining their AIM service to Bebo. *

Cheers,

David McKenna

What will Google’s next feat be?

Does anyone get annoyed when a new social network is created on the web and then you have to begin the process of adding contacts to this new network from previous social networks? Well some of the A-list bloggers do.

So, yet again, Google has come to our rescue by introducing a new web application which will allow users to integrate their various contacts from other social networks into one application, Social Graph API. (this social graph is partially inspired by FOAF and XFN) The contact importer is definitely an idea with possibilities, and what with the newly announced Microhoo monster, at least Google is still focusing on future potential needs and generating innovative applications. An example at Plaxo gives an idea of what the social graph would show on each user; basically listing what social networks the user is taking part in, ie Facebook, , Twitter, WordPress, MySpace, Flickr…the list goes on. The Social Graph API is a useful application to prevent social networks from overlapping.

Also Google will be making this information available to third party companies who can use the data as they wish, whether tracking how users know each other or what social networking services are being used more often. This way users will be able to make their network connections available during a search or hidden/limited to the viewers.

I believe this new application will prove useful in the future, especially for some social networks which seem to come and go as fads. This will enable users to bring their friends along to all their other social networks, or cut down on separation which may occur when changing social networks.

Tasia