Facebook Ready to Introduce New Location Service, Analysts Say
Facebook Inc. introduced a service that makes it easier for users to share their whereabouts with other people, making a deeper push into a fast-growing market pioneered by Foursquare Labs Inc.
The feature, called Places, is aimed at helping users of the social network find friends and disclose their own location, Facebook Chief Executive Officer Mark Zuckerberg said yesterday. Places works with existing location-aware tools offered by Foursquare, as well as Gowalla Inc., Zuckerberg said.
Services that help Web users share their whereabouts and find nearby friends could generate as much as $4.1 billion in annual ad sales by 2015, according to Borrell Associates. The features can help marketers more easily target customers — say, by reaching shoppers when they’re close to making a purchase. In the future, Facebook may include an advertising component to Places, Zuckerberg said at an event in Palo Alto, California.
“As of tonight Facebook has become the most important location-based service out there,” said Michael Gartenberg, an analyst at technology research firm Altimeter Group. “Facebook is already the hub of my social network for many activities and this becomes a natural feature to add.”
Places fits with Facebook’s strategy of adding tools and advertising options that may help it make money from a user base that surpassed 500 million this year. While Places is compatible with Foursquare and Gowalla, it may also lessen the need for Web surfers to depend on alternatives, Gartenberg said.
Pressure on Foursquare
“Facebook’s entry doesn’t mean the immediate death of other location-based services,” he said. “It will, however, put much more pressure on them to evolve.”
More than one quarter of Facebook users access the site via mobile devices, making them candidates for a location feature. A company could use it to send a coupon or special offer to users when they’re near a mall or driving by a gas station. While Foursquare made earlier inroads into the market for location- based services, its user base is dwarfed by Facebook’s.
Facebook will also make Places compatible with business- review site Yelp Inc. and available on the Apple Inc. iPhone and elsewhere on the mobile Web.
Making it easier for users to broadcast their locations may raise privacy concerns, said Susan Etlinger, who also works with Altimeter Group. Earlier this year, Facebook came under fire from users and lawmakers, who complained the company hadn’t gone far enough to help keep personal data under wraps.
Places will include comprehensive privacy controls, Facebook said. When users opt in to the service, their locations are only available to friends. They can choose whether to more narrowly share the information or post it broadly.
“Facebook made the absolute right decision by making this opt-in,” said Debra Aho Williamson, an analyst at EMarketer Inc. “Overall, the privacy controls seem smart and intuitive.”
The company pledged in May to fine-tune existing settings to help users more easily set their privacy settings.
Still, some users may be unsettled by sharing the added information with friends, Etlinger said.
“It is Pandora’s box when it comes to the cultural implications of this,” she said. “There may be a backlash. There may be people who are uncomfortable or unhappy with it.”
Privacy concerns haven’t stopped existing location services from growing. Foursquare reached 1.8 million users in June, up from about 1 million in April. An investment led by Andreessen Horowitz valued the company at $115 million. Mountain View, California-based Loopt Inc. and San Francisco-based Booyah Inc. also compete in the market.