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AOL, which tried to break into social networking two years ago when it spent $850 million to acquire Bebo, looks like it may finally give up on this painful acquisition.

Jon Brod, executive vice president of AOL Ventures, sent a message to employees today saying that the company is looking for a buyer for the property:

“As we evaluate our portfolio of brands against our strategy, it is clear that social networking is a space with heavy competition, and where scale defines success. 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.

“AOL is committed to working quickly to determine if there are any interested parties for Bebo and the company’s current expectation is to complete our strategic evaluation by the end of May 2010.”

At the time AOL bought the San Francisco-based social network, it had 40 million users, with a dominant presence in the United Kingdom and Ireland, and was the largest social network behind Facebook to open its platform to outside developers. Combined with AOL’s AIM and ICQ networks, it was supposed to be a cornerstone of the media conglomerate’s strategy.

But it never caught on in the United States. While AOL tried to figure out what to do with it, Facebook retained a quick pace of user growth, adding about 50 million users — more than a Bebo — every two months.

While AOL may end up finding a seller, it may not do so at a price that makes it worth AOL’s while. AOL could gain a tax advantage by simply closing Bebo rather than selling it.

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