A leaked internal memo from AOL reveals the firm is ready to give up on UK social networking site Bebo after just two years at the helm.
The ISP paid $850 million (€634 million) for the site in 2008, but said in the memo that user numbers are waning and that it lacks the resources to embark on a push to gain new subscribers, because the ad-revenue business model has been hit hard by the global economic downturn Gigaom reports.
Financial information is due to be filed with UK regulators today, and the firm says it will decide whether to shutdown the site by the end of next month.
“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,” the memo states.
AOL’s memo is already being seen as an admission that Facebook is now the master of the social networking world, a view confirmed by the fact that Bebo founder Joanna Shields has taken up a role at the site, FT.com reports.
Shields will leave the Shine TV group to take up the new position, and also becomes the latest in a long-line of former Google employees to join the social networking site, the paper states