The problem with success is the it quickly can become blind to others and their potential to leverage a culture in whom you take for granted. We must always stay aware of the infinite possibilities of our accomplishments. We have never reached our potential, or else, we have reached the end of innovation.

Shortsightedness and a deaf ear toward what the young and influence leaders want. Their IM was huge, but that is where they stopped innovating.

Two quick reasons I see.

1. Office bureaucracy and office politics. Unlike Facebook who initially started with startup mentality with employees with very little to lose you have AOL who people have built there lives around and and not just a few people thousands of people. It is funny what happens to most companies once they "make it" usually they don't want to risk anymore.
2. It is not what it does. They way that AOL has marketed its previous product is not that same.

The same reason Microsoft didn't invent the iPod

Simple --- AOL is old-school media and has a corporate culture that is antithetical to innovation and the way folks communicate in the 21st century.

Their roots were sunk in old media models that push content rather than organize markets and channels, allowing users to provide the content.

AOL was covering too large of a landscape (their target social demographic was all of America; children, teens, adults). Also, they were hard selling. Facebook was a free social media community. America Online was charging a ridiculous monthly fee for internet service provision, and they continued to do so long after the advent of hi-speed internet. When you are more-so concerned about the value of a dollar than about providing a service with unmitigated marketing passion, you will always, undoubtedly, lose out to your competitors.

Because AOL was a scam! They didnt know anything about technology, but alot about scamming investors and clients.

Because they are caught up in red tape aka the approval process and their leadership is worrying aboout who ccame up with the idea. They are not challenging themselves positively.

I don't think anyone thought of it.