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I saw this cool effect that blends bubbles into each other, and the space that they are overlapping is transparent.
enter image description here

How can I achieve this effect in after effects?

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You are interested in blending mode "Difference"

You can use it in "Blending mode" of layer, or on masks.

UPD: Adding screenshot, as asked enter image description here

Red — Mask Blending

Blue — Layer Blending

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  • Do you mind taking on screenshot on how? May 25, 2016 at 1:08
  • Screenshot added to the original answer.
    – Shultc
    May 25, 2016 at 18:35

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