LONDON — Bebo, the U.K. social networking site AOL bought for $850 million in 2008, is set to close by the end of May unless a buyer can be found.
AOL told staff on Tuesday that it was no longer “in a position to further fund and support Bebo in pursuing a turnaround in social networking.”
The news came ahead of AOL’s annual financial filing for Bebo today.
An AOL spokeswoman said the firm was “evaluating strategic alternatives with respect to Bebo, which could include a sale or shutdown.”
The evaluation is likely to be completed by the end of May.
The message to staff said, “As we evaluate our portfolio of brands against our strategy, it is clear that social networking is a space with heavy competition, and where scale defines success.
“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.”
Under topper Joanna Shields, Bebo pioneered Web dramas such as “KateModern,” backed by lucrative sponsorship deals.
Shields moved on to Elisabeth Murdoch’s Shine entertainment company and was recently poached by Facebook — Bebo’s main rival — to run its European operations.
Since her exit, Bebo’s number of unique users has fallen from 22 million to 14.6 million, according to Comscore.
Recent speculation has suggested that Bebo, which employs around 40 staff in the U.S. and U.K., could be worth as little as $100 million — were it to find a buyer. Faced with competition from Facebook, closure looks to be a more likely option.