An unconfirmed rumor has surfaced that either Google or MySpace is about to announce a big $1 billion to $1.5 billion acquisition in the social space. After checking around with multiple industry sources, we’ve concluded that if the rumor is true the most likely candidate is Bebo, which we are told is raising capital and simultaneously shopping itself around again. We put the chances of this rumor being true at a solid 50 percent. Update: Make that a solid 51 percent.
To be clear, there is a long history of rumors surrounding Bebo as an acquisition target that turned out to be false or never panned out. The last one was in May 2007, when Yahoo supposedly wanted to buy it for $1 billion. At a TechCrunch party last summer (before I was working here), Bebo CEO Michael Birch told me that the Yahoo bid was a complete fabrication and the first he heard of it was from his Dad, who called him up after reading about it. When I contacted Birch last night about this latest rumor, he had no comment.
Let’s just go through the logic for each potential buyer, who might be bidding against each other. An acquisition of this size by Google in the face of Microsoft’s bid for Yahoo would show how swift Google can act while its competitors dither. 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.
Google already owns Orkut, one of the biggest social networks globally, especially in Latin America. It just has not caught on in the U.S. Bebo is also a global play, but its strength is in English-speaking countries such as the UK, Ireland, Australia, and New Zealand. According to comScore, Bebo had 21 million unique visitors worldwide in December, 2007, with about 4 million in the U.S. Orkut had 25 million worldwide unique visitors. So Google would nearly double its social networking market share, as measured by active members. And it would have a strong English-speaking social network with which to begin to challenge Facebook here in the U.S.
Bebo is already part of Google’s OpenSocial platform, even though it embraced Facebook’s competing platform also. You can bet that Bebo’s Facebook effort would get a bullet in the head pretty quickly if it became part of Google. 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. It is a distraction it can do without.
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. But Bebo could help MySpace with its global expansion, particularly in markets like the UK, Ireland, Australia, and New Zealand, where it is weak. Securing the No. 1 spot in each international market is the key to dominating them.
There is also a technology play here for MySpace. Both MySpace and Bebo are adopting OpenSocial as a way to let outside developers create apps for their social networks, so there would be interoperability on that front. But more importantly, Bebo has done a good job of adding the latest features to its site while still keeping it clean of clutter. MySpace could use some of that DNA, and beef up its engineering ranks with a serious Silicon Valley presence. One billion dollars to future-proof its site does not seem like too much to pay.