The Week: Online news - AOL buys Bebo for $850m

AOL has acquired the social networking site Bebo in a $850 million cash deal.

Joanna Shields, the Bebo president, will continue to run the company and will report to Ron Grant, AOL's president and chief operating officer. The founders, Michael and Xochi Birch, are expected to continue to have input into the company. Randy Falco, the chief executive of AOL, claimed that the deal would be good for advertisers. He said: "This positions us to offer advertisers even greater reach and marketers significant insights into the desires and needs of consumers." Bebo has around 40 million users worldwide and is the number three social networking site in the US and the UK.