The transaction is rooted in the belief that social networking is becoming a major gateway for how people use media and services on the Web, including email, search and video. "People are using social networks as their prism to the online world," said Bebo President Joanna Shields, a former Google Inc. executive who joined Bebo last year and is expected to remain at the helm.AOL's business model is under transformation. Their revenue-mix is shifting away from subscriptions to advertising. This bet is a further signal that they have to have global scale to compete against first-tier companies.
This announcement further means that Yahoo-AOL deal is unlikely. Rupert Murdoch appears to have walked away. Will Yahoo finally realize that it has few options left? When will the deal be consummated?