AOL has finally gulped Bebo and formed what it calls People Networks. AOL bought Bebo earlier this year for a heart stopping $850 million. The group will be run by Joanna Sheilds, formerly of Bebo. David Liu was working on the AIM, ICQ, Goowy and Yedda teams is joining the People Network. I have met him on a few occasions - smart guy. You can find more details in Randy Falco, AOL CEO’s memo below the fold. Also, check out this Financial Times article that points to Yahoo possibly lose the ad deal. No surprise, but timing is clearly not good.

Dear AOL colleague,

I’m pleased to report that we’ve completed our acquisition of social networking pioneer Bebo, which will serve as the centerpiece of our reinvigorated community efforts and positions us to capitalize on this fast-growing space.

In addition, Joanna Shields, who so ably led Bebo since 2007, is coming on board as the head of our newly formed People Networks business unit. People Networks will include Bebo, AIM, ICQ and our other community products, as well as two of our other recent acquisitions – Goowy Media and Yedda. Combined, People Networks reaches an impressive 80 million users worldwide.

Bebo is a true innovator in this space, combining a relentless focus on the consumer with an open platform for developers and an integrated marketing approach. As a result, Bebo has created a unique environment that lets advertisers, brands and media companies engage with Bebo’s audience – without sacrificing the experience of its 42 million users.

We’ll be able to improve all the pieces of People Networks by integrating enhanced e-mail and chat into Bebo, letting users merge Bebo and IM profiles to create common screen names, and cross-promoting Bebo and AOL content. And working with Platform-A, we’ll be able to monetize this highly engaged audience in ways that other social networks can’t.

A note of thanks is due to Kevin Conroy, under whose leadership our messaging platforms have made great progress. AIM maintained its No. 1 position in the U.S., growing ad impressions 5% in Q1, while expanding its reach through the OpenAIM and AIM for iPhone efforts. ICQ’s user base, meanwhile, grew by more than 20% last year, and was up 7% in Q1. Kevin was also instrumental in our acquisition of Yedda and Goowy, and will continue to work closely with the Yedda team on the integration of their Q&A and the Goowy team on widget creation to drive higher engagement and monetization for our products.

I’m pleased that David Liu, who has done a great job leading the AIM, ICQ, Goowy and Yedda teams under Kevin, will be joining People Networks to continue to drive successes in these important platforms.

With the formation of People Networks, AOL is now fully focused on the three key online growth areas – our advertising network, publishing, and people networks. And we’re making great progress in each of these areas.

Publishing is on fire, with our revamped products, programming and commerce sites attracting a larger, more engaged and more valuable audience. Platform-A is rapidly integrating all its companies, and is now organized to offer advertisers and publishers one-stop access to the biggest and best ad network in the business.

I’ll be visiting you this summer to talk to your teams about the direction we’re taking. So please stay tuned.

In the meantime, please join me in welcoming Bebo to the AOL family, and congratulating Joanna on her new role in the company.

Randy

Listening to the FCC hearing today, which was called in response to Comcast throttling BitTorrent traffic on its network, it seemed like Chairman Kevin Martin may be rethinking his laissez-faire stance on Network Neutrality. Martin said that network management practices should be “open and transparent” to the end user and that the FCC would be “willing and able” to intercede in cases of abuse.

Comcast CEO Executive VP David Cohen, who argued that the company wasn’t blocking anyone’s content, but was merely trying to manage its network during times of peak traffic, didn’t come off too well. In the wake of the event, it seems that some form of Net Neutrality legislation or regulation to halt discrimination (to use the terms bandied about during the hearing) would be in the future for ISPs. Whether it goes as far as an Internet Bill of Rights that gives users the “unalienable right to liberty on the Internet,” as proposed by Democratic Commissioner Jay Alderstein, or some form of case-by-case adjudication of discrimination claims, as offered by Democratic Commissioner Michael Copps, is uncertain.

Given the anticompetitive nature of Comcast throttling traffic from a potential video competitor, Martin — who in the past has been loathe to go beyond the FCC’s current policy pushing open networks — and other Republican lawmakers seemed galvanized to act. Indeed, an attack on the free markets might be too much for the FCC to ignore.