AOL Joins Social Graph Race, Buys Bebo for $850 Million

This morning AOL announced that they are acquiring Bebo for a whopping $850 million. This is a surprising move as well as a surprising valuation considering their relative size. Currently, Bebo’s dominance exists in Europe but not elsewhere. In a conference call this morning, AOL stated that they will now have a social graph of over 80 million users through combining Bebo and AIM.

Honestly, I am quite surprised that it has taken AOL this long to build a dominant role in the social networking space. As previously predicted, users will most likely have a center of their social graph via one of the larger sites such as Google, AOL, Yahoo! and now Facebook. Those sites will then provide services that enable other sites to query their social graph to determine their existing contacts.

In addition to building out AOL’s “social graph”, this acquisition has been geared toward international expansion. Also integrated into this new combined social graph is ICQ, the messaging client which is highly popular among uber-geeks. It will be interesting to see how long it takes for these disconnected units to join together to create a single source of social identity. The acquisition itself will take approximately one month according to Randy Falco, CEO of AOL.

While not a complete surprise, having AOL as the suitor for Bebo is definitely surprising. It also emphasizes how the leading web companies are in a race for organizing their users’ social connections and opening up to create their own social services. The next 12 months will surely be an exciting time as the social graph race unfolds.