AOL has bought social networking site Bebo for $850 million in cash. The Time Warner-owned web services company said that the Bebo network would be a valuable place for it to sell advertising.
AOL began in the internet access business, but has expanded to offer instant messaging software AIM and ICQ. Social networking sites have been a phenomenon, with tens of millions of internet users keeping in touch and posting information about their lives on sites such as Bebo, Facebook and MySpace. Traditional business has been keen to buy into the phenomenon and instead of launching their own platforms, business giants have tended to buy into existing sites.
Bebo rival Facebook received $240 million in funding from Microsoft last October in a deal that valued the company at $15 billion. MySpace was bought by Rupert Murdoch's News Coproration in 2005 for $580 million.