Facebook Ventures into Location-Based Services – But Is There a Dark Side?

By now, you’ve probably been aware of Facebook’s latest announcement regarding its move into the location-based arena. Called Facebook Places, the social network is banking on its 500 million monthly active users to start checking into places and basically do what millions have been doing with Foursquare and Gowalla.

Within the social media space, Facebook would probably be considered one of the proverbial “800-pound gorillas” along with search engine giant Google—almost like how Microsoft, at one point, was the big guy in the room. So when Facebook CEO Mark Zuckerberg walked into the room yesterday to announce Facebook places, two things became certain:

• Facebook’s check-in service concept had been rumored for quite some time— probably one of the best, worst-kept secrets in the industry
• The location-based service marketplace had gone from a marketplace to a monopoly in one fell swoop

Thus, the empire was born and, like in Star Wars, “this is how a Republic ends…with thunderous applause.”

What is the Republic?

Several companies had formed the marketplace before Facebook’s foray into location. There was so much competition out there that people were just a bit confused about which one was succeeding. All the news out there for the past few months has centered around Foursquare, Gowalla, Yelp, and Brightkite, and it seems as if Foursquare was taking the crown as it had amassed a following of over 2 million users and over 200,000 daily check-ins. But capitalism reigned supreme, and these startups were doing just fine…until Facebook decided to change the marketplace.

The Downfall of the Republic

We all knew that Facebook was starting to move into this area. Mashable reported that the social network was beginning to add more location features to its site. Frankly, it only seemed natural for them to integrate location, but what brought it all downhill was when Facebook announced it. First, the universe was living in perfect harmony with location-based services operating like they were and pushing data to Facebook. But that all seemed to be a clever ruse, and we soon found out that the main players in the game had all turned to the dark side and succumbed to the power of Facebook.

In effect, it’s almost as if Facebook made them all kneel before it lest they lose out on a critical audience and market. Even at Facebook’s announcement last week, you had the major players on stage from Gowalla and Foursquare (photo courtesy: Jolie O’Dell/Mashable) where they voiced their support over Facebook’s interference in their bread & butter. For those watching the announcement, it may have seemed that Foursquare, the market leader, just got crushed by Facebook’s involvement, and that seemed to be almost inevitable—but did showing of these two companies assuage people’s fears and make them acquiesce to this new feature?

Did the general public offer up thunderous applause?

Mark Zuckerberg: Emperor of Location-Based Services

So what must happen now? Facebook’s CEO, Mark Zuckerberg, has gobbled up all resistance and put them under his power. He can essentially leverage Facebook’s incredible power to reap the benefits. And just how powerful could Facebook Places become that it knocks all players out of the field and potentially establishes an impossible barrier to entry? Just look at the infographic generated by Mark Fidelman, and you’ll see just how grave the situation is.

With a potential user base of over 500 million per month, Facebook is several times larger than all of the other location-based services (LBS) combined—even with just a fraction of their monthly users, Facebook could easily exceed the largest LBS, and most likely, LBS users probably have a Facebook account. Still, it may not necessarily reciprocate with that respective network or even at all. Even now, Facebook Places allows users to tag others there and upload photos to help bring it into context. And they’ve even considered how businesses can leverage – perhaps giving them leverage in the pseudo “location-based wars.”

And let’s face it: Zuckerberg has the most generic yet specific social network right now. By having people check into locations, they can share their experiences with their friends and have it instantly go viral, or they could also write up business reviews, stripping away any hope of Yelp playing a significant factor in user reviews. In fact, according to Mashable’s Facebook Places field guide, Facebook is going to make its information and data the law of the land:

“…Facebook is opening up certain data that will allow any and all developers to access parts of Places. That means that a lot of applications will start pulling information from Places, scraping it for data about people, locations, groups and more.”

There is a lot of data out there, and Facebook has amassed quite a bit. For businesses and individuals to tap into that could result in large applications, privacy issues or whatever else people have planned. And let’s not forget that now that more people will use Facebook places because it’s more commonplace than, say, Foursquare or Gowalla, you also succumb to their privacy settings, which have differing opinions about their effectiveness.

Can This New Model Clarify Business Use of Location Services?

For those venues with specific and physical locations, location-based services can offer some good benefits, and some major brands have started to pay attention—just look at what Bravo, VH1, the New Jersey Nets and others are doing with Foursquare and Gowalla. So, with brands already creating Facebook fan pages (now known as “like” pages), what can they come to expect with Facebook Places? You can make a page from there and offer much more interaction than you could already get through existing LBS platforms.

According to Mashable’s field guide to Facebook Places, just set up a location and then claim it. Once you’ve done that, it will become a business page. From there, you just act the same way as you would with your brand page. However, one thing to try and decipher is what will happen if you have multiple store locations, like Radio Shack or McDonald’s. Will those types of businesses need to staff someone in-house to manage the Facebook page? Or will it rest with just a Facebook page handled by corporate? It’s an actual toss-up, and I suppose it will depend. Having a store manager create and manage a social media presence for that location is not far-fetched, so anything is possible.

According to Facebook, impersonations of businesses will also not be possible. You will have to claim a location to be turned into a page. But to authenticate that claim, you must submit a license or some official documentation that Facebook will check to see if it’s valid. Then, you will become the manager of that page. Once that’s done, just have people become fans of your page, check-in, and start conversing.

Is This the End for the Rebel Alliance?

It is highly doubtful…but what will most likely happen, if it hasn’t yet, is that Facebook Places will start to evolve, and people will be frustrated with too many services that they’ll ultimately resign themselves to one location. The onus to innovate and create an incentive for customers to come back is with location-based services. For now, it looks like Facebook remains the ultimate source of power in the galaxy & will only grow stronger. Fortunately, we won’t see the end of LBS platforms for quite some time, but how will this end, and who will be the hero of the war?