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 shopping itself around again. We put the chances of this rumor being true at a solid 50 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.

Bebo

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The rumors keep on rolling around the surprise semi-hostile Microsoft bid for Yahoo this morning. Sillicon Alley Insider says they’ve heard that a couple of hedge funds were already preparing their own bids for Yahoo, and were (or perhaps still are) days away from making their move.

According to our source, other big private equity funds were busy today, too. Taking calls from News Corp., that is.

News Corp. and Yahoo have been mulling over a merger (of Yahoo and MySpace) since the middle of last year. But the deal back then had News Corp. selling off MySpace in exchange for 25% of Yahoo’s stock. Now the roles have been reversed. Today, News Corp. was supposedly making calls to put together a syndicate and make a counter offer to what Microsoft put on the table. No takers so far, we hear.

All of this is likely to come to nothing, though. I agree with Paul Kedrosky and Mathew Ingram - Microsoft has probably already won this deal, simply because they aren’t relying solely on spreadsheets in their valuation. Hedge funds don’t have that luxury.

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Ever since the rear-guard at the Wall Street Journal won the battle to keep its news pages behind its subscription wall (although, its opinion pages are now free), they have been cracking down especially hard on anyone trying to breach that wall—even if those people happen to be paying subscribers. In what appears to be an attempt to discourage freeloaders, the WSJ.com is locking out anyone from its site when it detects more than one simultaneous log-in on the same account. But innocent, rule-abiding subscribers who may be using multiple computers, or doing nothing wrong other than forgetting to log out of their accounts, are being shut out as well (see email below).

That is no way to treat your customers. In fact, it shows an utter disdain for how normal people actually use the Web. But it is an understandable, and classic, reaction. Incumbent executives always try to fend off inevitable disruption by blindly protecting their current sources of revenues. I liked Rupert Murdoch’s original idea of tearing down the entire subscription wall much better.

Here is the e-mail I received from a paying online subscriber, describing his ordeal with the WSJ.com and a screen shot of what he saw when he was in breach of the multiple login rule.  Hopefully, this is an isolated case. Otherwise, the WSJ.com could have a reader revolt on its hands of its own making. (If anyone else has experienced the same thing, please share in comments).

I’ve been a paying subscriber of the Wall Street Journal online since 1995.
About two weeks ago they made a change so that they allow only one
login per account at a time and closing a browser isn’t sufficient,
you have to manually logout. If you forget and try to access the site
from another browser or machine, they lock your account and make you
call in to get it reset.

As one who uses many computers and browsers, this is a major change
and hassle. They don’t even let you get to the free version without
clearing cookies if your account is locked; you just get a nasty
message.

Furthermore, the unlock process requires long-wait times on the phone and
answering lots of questions. I tried email, but no response after 24 hours.
I’ve been through this twice now and they insist that they will continue this
policy to prevent subscription sharing.

Given general trends and that there was recent talk of them going free
and 100% ad-supported, this feels quite draconian. I fully appreciate
their desire to prevent people from stealing their service, but they
are actually preventing paying subscribers from easily using the service.
Also, there are better technology solutions to the problem.

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News Corp chairman Rupert Murdoch has said that the Wall Street Journal online will retain a paid subscription model, despite months of speculation that the site would go completely free.

Although the full details of the plan are not clear, Murdoch said that much more of the site would be offered for free, however “the really special things will still be a subscription service, and, sorry to tell you, probably more expensive.”

The decision bucks the recent trend of other subscription services being dropped as online advertising revenue offered a viable economic alternative to paid subscriptions, the biggest switcher being the New York Times in September 2007.

(via WSJ)

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