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Feb. 8, 2008

There's apparently a new rumor that has surfaced hinting that either Google or MySpace is about to make a billion dollar acquisition in a popular social site. Some say it might be as high as 1.5 billion.

If that rumor is true, the most likely candidate would be Bebo, which is raising new capital. The chances of this rumor being true are about 50-50 according to some industry observers.

There is a rather long history of rumors surrounding Bebo as an acquisition target that turned out to be false or that never materialized in the recent past. In May of last year, Yahoo supposedly wanted to acquire it for $1 billion. At that time, Bebo CEO Michael Birch said that the Yahoo bid was a complete fabrication.

Of course, a Google acquisition of this size and in the face of Microsoft’s bid for Yahoo would show how swift Google can act while its competitors fiddle around. It would also show that what it is really scared of is not a combined Microsoft-Yahoo, but the growing threat from fresh-faced upstart Facebook.

Bebo is already part of Google’s OpenSocial platform, even though it embraced Facebook’s competing platform also. Still, given Google’s recent earnings shortcomings, which were partly attributed to an inability to make its ads on MySpace pay off, investors might not be so keen to see the search engine double-down on social networking.

Some say it's certainly a big distraction it can do without, thank you very much.

So what then of MySpace/News Corp? What does it need Bebo for? It’s 107 million worldwide unique visitors overshadows every other social network out there. However, Bebo could help MySpace with its global expansion, particularly in markets like the U.K., Ireland, Australia and New Zealand.

Google already owns Orkut, one of the largest social networks globally. Orkut is especially very well known and highly successful in Latin America. It simply just hasn't caught on in the U.S. as much, that's all.

Additionally, Bebo is seen as a global play, and its main strength lies in English-speaking countries such as the U.K., Ireland, Australia and even New Zealand. Bebo had 21 million unique visitors worldwide in December of last year, with about 4 million coming from the the U.S., according to comScore.

Overall, Orkut had about 25 million worldwide unique visitors. So Google would nearly double its social networking market share, as measured by active members.

Google would also have a strong English-speaking social network with which to begin to challenge Facebook. Securing the Number One spot in each international market is the key to dominating them.

More importantly, Bebo has done a great job of adding the latest features to its site while still keeping it clean of clutter and junk. MySpace could certainly use some of that and beef up its engineering ranks with a serious Silicon Valley presence.

Where we stand, 1 to 1.5 billion dollars to future-proof Bebo doesn't seem like too much to pay.

For MySpace, there is also a technology play here, so to speak. Both MySpace and Bebo are adopting OpenSocial as a way to let outside developers create APIs for their social networks, so there would be interoperability on that front.

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Source: Tech Crunch