Facebook to Foursquare: You're out

It's obvious that Facebook sees serious potential in mobile check-in service Foursquare: it tried to buy it for $125 million.

That didn't work. So Facebook started to get into the location game, too. It launched Facebook Places, its own geolocation service. And today, Facebook went ahead and launched a big new suite of mobile features that includes, notably, enhancements to Facebook Places that let businesses easily automate "deals" for when users check in. On the surface, given Facebook's scale, this looks like it could spell difficult times ahead for Foursquare.

Like Foursquare, Facebook's new deals product lets businesses draw in customers by offering a deal or discount to those who "check in," and those deals can be created by any business, small or large, through a self-service tool.

It gets more sophisticated: Activate the deal, and it'll be shared on your Facebook wall. There are also multiple kinds of deals, such as charity deals, with which a business donates a given amount for every check-in; group deals, which a Facebook user can only activate by bringing friends (and checking them in through Facebook Places as well); and loyalty deals that reward members for multiple check-ins. (Foursquare also offers "loyalty" rewards, as well as rewards for the "mayor" of a venue--the person who has checked in the most.)

Facebook has well more than 500 million users around the world, and while CEO Mark Zuckerberg declined to comment on the specific reach of Facebook Places in his presentation today, he did say, "We know that it's multiples larger than any other location service." And that's why a potential partner might be allured to Facebook Places deals, as opposed to Foursquare--simply more reach.

It also appears that running a Facebook Places promotion is free, as it is for basic deals and promotions on Foursquare. When asked about financial specifics in Wednesday's press conference, Facebook representatives simply said the way that they will monetize these deals is to encourage businesses to buy Facebook display ads to promote them.

Foursquare representatives declined to comment on the nature of their relationship with Facebook, but all signs seem to indicate that it may be chilly. For one, there was the botched attempt to purchase Foursquare. Then there was the more subtle fact that in Facebook's press conference, deliberate attempts were made to mention other players in the "geo" space but not Foursquare.

One location-based networking service, Loopt, is a partner in Facebook's new mobile API rollout--as is Yelp, which operates a check-in feature as part of its business reviews service. Facebook executives also name-dropped Gowalla, a check-in app that has been a Facebook partner. Foursquare didn't get any shout-outs, nor has it implemented the Facebook Places API for check-ins.

In the past, Foursquare CEO Dennis Crowley--who was mum on a reaction to Wednesday's announcement--has said Foursquare has an advantage in its playful brand personality: "It's difficult to build services that are supposed to scale to, you know, 30, 50, 100 million users right off the bat, because they got to be kind of tailored down. By definition, they have to be a little bit generic to speak to that large of an audience," Crowley said at the time.

But the potentially positive news for Foursquare in the wake of Wednesday's announcement is that Facebook's aggressive attempts to move into the space show that the massive social network sees enough promise here that it's willing to fight to own it. It's the old "validating the space" argument--which, of course, can sometimes just be positive spin.

In this case, Foursquare has some tricks up its sleeve; it's already started to move into offering branded "guides" and tips on behalf of advertisers whom users can opt to "follow," and there are hints that it may be moving into personalized recommendations, something social-networking services have had a tough time nailing. As Soraya Darabi--co-founder of restaurant check-in and food photo app Foodspotting, a likely Facebook Places developer in the near future--put it, "There is room for everyone to play in this space." She added that she sees location-enabled promotions as evolving into their own form of advertising so that its traditional display ads that should be threatened, not Foursquare.

The other good news for Foursquare is that, given Facebook's size, it may be like a bull in a china shop, as it experiments with the increasingly personal territory of location sharing. Many active users of services like Foursquare and Gowalla maintain significantly smaller lists of contacts on those services than they do on Facebook, keeping it restricted to an intimate selection of people with whom they often spend time. Facebook does let its users group their friends into tiers of profile access and limitation, but executives have said it's a service that doesn't get used often.

Consequently, redeeming a Facebook Places deal requires checking in and hitting an "activate" button, which shares the deal on that user's Facebook wall. That's great for businesses that want to spread the word, but possibly not so much for Facebook users eager to save money on deals at the local Botox clinic or adult-toy emporium.

"When you check in to claim a deal, your action is posted to your friends' news feeds, similar to when you check in to a place," a statement from Facebook read. "The privacy settings you have chosen for Places apply to your claimed deals, as well, so you never have to share this information with anyone you don't want to."

But you don't have an on-off switch for individual check-ins and deals, the way Foursquare does, so it's a bit of an all-or-nothing game. And that will be the big decision factor for users and businesses looking to flock to Facebook Places as an alternative to something like Foursquare: something that's so big and open can promise unprecedented exposure, but exposure can be of both the good and bad variety.