• Reuters et al., Thursday, August 19, 2010 12:30 PM

As expected, Facebook on Wednesday introduced Places -- its answer to location-based social networking. "The addition of so-called location services ... opens new revenue opportunities for the company, but also presents it with delicate privacy challenges," reports Reuters.

According to The New York Times, the service "could help the company tap local and small-business advertisers and sharpen its competition with Google."

"With its trove of user location data, Facebook has the power to enable new classes of location-powered applications to reach the mass market for the first time, driving significant value to businesses and developers," notes Inside Facebook.

"With Places, Facebook hasn't rewritten the social media world, but it might just rewrite the way people think about social networks," Forrester Research analyst Augie Ray tells The Los Angeles Times. "Soon, the local restaurant or hiking trail may have as rich a personality as do the people on Facebook."

Yet, as Gartner analyst Ray Valdes tells The Times, Facebook will have to tread carefully regarding privacy concerns of its users. Earlier this year, the company faced harsh scrutiny over revisions to its platform and privacy policy that encouraged members to make personal details more broadly accessible on the Internet.

"Careful attention to the behaviour on and response to location-sharing social networking websites -- and an extremely carefully constructed set of privacy controls -- have created a basic but robust location option," concludes The Guardian (UK). "Crucially, the whole service is opt-in, though that won't be enough to deter the privacy campaigners who say that we share too much with Facebook, and that the system could be open to exploitation."

Meanwhile, rather than a threat, location-based social networking leaders like Foursquare and Gowalla are welcoming Places as a complement to their own services, and as an opportunity to gain additional distribution.

The risk, of course, is that Facebookers will abandon the passport stamps, badges and honorifics they collect in Gowalla, Foursquare and other services for Facebook's approach," reports Fortune.

Long term, "Places may eventually open up new financial opportunities for Facebook through partnerships with retailers and restaurants, and location-specific advertising," writes the Financial Times.

Citing data from Borrell Associates, Bloomberg notes: "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."

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