Facebook Deals Threatens Google Places, Foursquare, Gowalla

Facebook Deals is a shot across the collective bows of Google, whose Places local search is on the rise, and check-in services Foursquare and Gowalla.

Facebook isn't lavishing kisses on Foursquare, Gowalla, Google or any other company with a mind to compete in making money from local businesses with its new Facebook Deals service.

Facebook Deals connects U.S. consumers with local businesses via the Facebook Places check-in social service. iPhone users must install the Facebook for iPhone 3.3 application, touch "Places" and then "Check In."

Nearby stores participating in Facebook Deals will display a yellow icon. iPhone users can view the deal and check in to claim it, then show their phone to the cashier to receive the gift or discount. Starbuck's, McDonald's, Gap and some 20 other stores are currently enrolled in the Deals program.

Consumers who check-in via Deals get free or discounted goods, or have donations sent to charities. Businesses can lure both new and returning patrons, explained Tim Kendall, director of monetization for Facebook, during the Deals launch Nov. 3.

Facebook made it clear during the launch event that it doesn't explicitly make money from Deals--for now, at least. Over time, Facebook will urge its business partners to promote their products in Facebook's display ads.

"The Deals concept starts to solve an age-old problem, at least in the Internet world, that businesses had," said Emily White, director of Local at Facebook. "For a long time, merchants have been told 'you need to be online.' But for local businesses, the reason behind that hasn't been entirely obvious to them."

Deals, White argued, will turn fans, visitors, and eyeballs into real dollars. Merchants can sign up for Deals with a one-page workflow form.

Thanks to its 500 million-plus users, Deals is a major threat to services such as Foursquare and Gowalla, which rely on the check-in mechanism to give consumers store coupons, bargains and other perks.

Foursquare has 4 million users today, but who would use it going forward when shoppers can check-in from Facebook and access more or better deals? Forrester Research analyst Augie Ray told eWEEK:

"Facebook has found the perfect recipe for encouraging people to check in, including those who never before saw a reason to do so."

"This is a win-win-win," he continued. "Consumers will be encouraged to check in more often because of the deals available; businesses can drive more traffic and reach consumers with offers that cost nothing; and Facebook wins by increasing engagement on the platform."