Social networking site Bebo is to be sold off, two years after being acquired by AOL, which is actively trying to find a buyer.

The site, which was acquired two years ago for $850m, could either be sold or shut down later this year, AOL has told its staff through an internal memo which cited a market ‘heavy with competition’ as a reason, with growing smaller sites entering a marketplace dominated by Facebook which had 462.7 million unique users in February alone.

Bebo had 12.8 million unique users in that same month, by comparison.

"Bebo, unfortunately, is a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space. AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking," the memo explained.

A decision is expected next month.