Why Facebook Deals is Bad News for Foursquare

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Foursquare just got Facebooked. And it’s more than just a poking. It might be a body blow to one of the location-based service’s killer features.

When I first covered Foursquare for TIME in January, I gave the (then) pint-sized start-up praise for having a path toward a revenue stream through the “deals” part of their platform, which let Foursquare users earn rewards — a buck off a Frappacino at Starbucks, for example — in exchange for checking into local merchants:

Partnerships like these are currently free for businesses; Crowley says Foursquare is still trying to figure out how to make rewards even more useful for its members. While Foursquare isn’t under any immediate pressure to make money — the site received $1.4 million in an August round of funding — its partnerships with businesses provide at least a hint of the way it plans to turn its traffic into a revenue stream. And in an online world crowded with Next Big Things still struggling to turn a buck, that may be the most revelatory thing about Foursquare yet.

When Facebook first rolled out its Places functionality late this summer, Foursquare professed to not be concerned. And it was with good reason: while Facebook users could begin to “check in” to locations, the application had none of the fun of Foursquare. No badges, no mayors, no savings. (More on Time.com: Photos: Inside Facebook Headquarters)

But with Facebook’s announcement today of Facebook Deals, that’s beginning to change. In a press conference, CEO Mark Zuckerberg rolled out an impressive roster of merchants willing to play along with Facebook’s Places. Check into the Gap and earn a free pair of jeans. Check into North Face and earn $1 for the National Park Foundation. Not only that, Facebook has removed much of the friction from the process. It’s a few simple clicks from walking into a store and earning a deal through Facebook.

The offer’s equally attractive for businesses. Facebook isn’t charging for merchants to create a deal, and Zuckerberg promises businesses will have a self-serve platform to launch their own deals in the coming months.

While much of the press surrounding Facebook Deals is positing it as a Bad Thing for Groupon — and it is — Foursquare might be hurt more. Though the company has bolstered its roster of users impressively since January, it’s tough to imagine why a casual user, unimpressed with the gaming mechanics, would check in via Foursquare rather than Facebook. Not only did Foursquare’s deals represent an easy-sell to those skeptical of location services, it also could have been a means for the company to monetize. But that’s not so likely now – Facebook Deals is even an easier sell for businesses, desperate for any way to tap into Facebook’s 500 million users worldwide and especially in a way that’s completely free. (More on Time.com: Facebook Launches New Mobile Tools, Location Based Deals)

Could the Facebook juggernaut claim another victim? Foursquare will always have its loyalists. But announcements like this shed a lot of doubt on the site’s ability to keep scaling.

More on Time.com:

Facebook: You’re Not the Customer, You’re the Product

Bing Gets Facebook Integration: Be Careful What You ‘Like’

When Does Life Without Facebook Become Unsustainable?

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