Facebook Kills Places -- Is Deals Next?

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Well, it looks as if Facebook Places hasn't turned out to be a Foursquare killer after all. A year after many predicted the company's doom with the arrival of a rival Facebook's check-in service, Facebook is the one that wound up throwing in the towel.

Buried in its announcement of new privacy settings Tuesday, the social networking giant said it was scrapping Places as a standalone smartphone feature. Instead, Facebook users will be able to share location information more widely -- across the desktop PC and devices, and in status updates, Wall posts, and uploaded photos.

In short, Facebook plans to integrate checking-in with other activities on the site more seamlessly, rather than maintaining it as a separate offering. "The Places check-in feed on the mobile app will go away and now a 'place' becomes another descriptor to add to any post," a company spokesperson told the Inside Facebook blog.

That's a long way from the fanfare surrounding the launch of Facebook Places last August, when it was viewed as a serious threat to the fortunes of social locations startups like Foursquare, Gowalla and Loopt. But the service failed to gain much traction with users as a direct competitor, leading to Facebook's pulling the plug.

David Berkowitz, vice president of emerging media at digital agency 360i, said Places never proved to a core part of the Facebook experience, like events and gaming. "Interestingly, Facebook will start to resemble Twitter more, where location is often shared to add context to posts, but there's no standardized check-in activity," he observed.

The demise of Places also raises a question about a related service rolled out earlier this year: Facebook Deals. The company said Check-In Deals will still be available, with the option to redeem them attached to the news feed item posted about the location offering the deal. "You'll then be able to click on the deal title and will then be taken to the claim flow," according to Facebook.

But Deals has hardly blown away social buying sites like Groupon and LivingSocial. "The big question for Deals now is whether Facebook will continue to support it well enough to make the national rollout work," said Berkowitz. "So far, Deals is tangential to the Facebook experience, and Facebook is indicating that anything on the sidelines will have to flourish or perish."

It's all good news for Foursquare, on top of reaching 10 million users and raising another $50 million in June. Inside Facebook also points out that unless Facebook adds a filter to the news feed showing only posts tagged with specific locations, it will be harder to find out exactly where friends are and meet up with them. That makes Foursquare and other check-in services look even better for keeping track of friends in real-time.

The broader challenge for these companies is that checking-in remains a niche activity. Only 16.7 million U.S. mobile subscribers checked in to local places in March, or about 7% of all wireless users, according to comScore. Check-ins may not be vital to Facebook's overall business, but they are to Foursquare. Hence the company's efforts to tie check-ins to tangible rewards through deals with American Express and syndicated offers from Groupon, LivingSocial and other daily deal sites.

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