Rumor: Is Google About to Buy Bebo For $1 Billion To $1.5 Billion? Or Will it Be MySpace?
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 …
Context & Ripple Effects
This rumor lands in the middle of a running acquisition conversation about social networks: TechCrunch was already asking who will buy Facebook back in May 2007, so naming a price band of $1 billion to $1.5 billion for another major network is a continuation of that speculation, not a new theme. The claim itself is unconfirmed — both the Google-buyer and MySpace-buyer versions are flagged only as rumors.
What makes the Google angle interesting is the existing relationship: Bebo joined MySpace and SixApart in Google's OpenSocial coalition in November 2007, meaning Google would be buying one of its own platform partners. Meanwhile Google executives have been openly complaining about how hard social networking traffic like MySpace's is to monetize — even though its August 2006 search and ad deal generates 27 percent of Fox Interactive's revenue.
First-order effects
- If either rumored deal lands at $1 billion to $1.5 billion, it sets a hard price anchor for every other independent social network — directly feeding the buyer-speculation around Facebook from last year's coverage.
Second-order effects
- A Google purchase of Bebo would collapse the OpenSocial partnership structure, since Google would own a member network outright while MySpace remains a partner; a MySpace purchase instead puts News Corp back in acquisition mode after the Washington Post reported in October 2006 that teens were already drifting away from MySpace.
Third-order effects
- If buyers keep paying nine-to-low-ten-figure sums for networks with unproven ad economics, social consolidation proceeds on reach alone — and whoever owns multiple networks inherits Google's documented monetization problem rather than solving it.
The trend: Social networks are entering an M&A market where valuations are being set on audience size before anyone has demonstrated that social advertising actually pays.