Bebo faces closure

AOL is looking to sell or shut down the online social site Bebo, just two years after buying it for US$850 million.

According to the Associated Press, an e-mail was sent to employees by Jon Brod, who heads up the firm’s start-up acquisition and investment arm, AOL Ventures. He said that the social networking site would need a "significant investment" to remain competitive.

Bebo has seen more success in Europe than the US and according to comScore it pulled in just 5.1 million US users in February, compared with Facebook’s 209.7 million.

Clayton Moran, analyst at The Benchmark Co., said that the US$850 million price tag AOL paid for the social networking site was questioned from the start.

“It made a lot of industry watchers scratch their heads," Moran told the Washington Post. "At this point they probably would admit they overpaid for it and now they're just cleaning it up."

Brod email said that AOL will look for potential buyers and plans to finish a strategic evaluation by the end of May.