Sharing The Place-Based Social Media Market

By Niraj Chokshi

The tech industry's David's are about to meet its Goliath's.

Facebook may add location data to its status updates as soon as this month, while new features for Google Latitude, which lets users share their whereabouts, will make the service more like existing location-based social networks. Both have the users to bring the phenomenon into the mainstream and give the startups that built up the market a run for their money.

Location sharing has been around for a while, driven mostly by startups such as Foursquare, Gowalla, MyTown and BrightKite. Foursquare lets people share where they are and what they're doing and users get badges for reaching milestones such as visiting the same spot repeatedly or checking in many times in a night.

But all those startups will soon face some serious competition. The three-month-old Google Latitude already has three million active users, roughly the same as Foursquare and MyTown combined, which have one and two million users, respectively. Latitude may soon offer a location history and let users explicitly "check in" with text updates on what they're doing, both features popularized by startup competitors.

Facebook users could be able to add locations to their status updates as soon as this month, a feature which would represent a "direct threat" to existing startups, AdAge reported yesterday. The monster social network has struck a deal with McDonald's to make an app that displays featured menu items alongside user updates made at any of the chain's locations. Econsultancy's Meghan Keane provides some context and sums up what the new feature means for the competition:

If Facebook can get its mass quantity of users to check in from different venues, it could cut off the growth to these companies. The social network waited a long time to launch a public status update to rival Twitter's rapid growth, and clearly doesn't want to make the same mistake here.

Late last month, Foursquare founder David Crowley said his company was debating whether to raise more funds or sell itself to a larger organization. Yahoo was, at least as of early April, interested in scooping the service up for roughly $100 million.

More recently, Crowley told BusinessWeek that "all this talk about valuations and exits is a distraction," but as one analyst told the publication, given competition from Facebook and Twitter, time is of the essence. BusinessInsider's Jay Yarow agrees: "If Foursquare hasn't made a decision yet about selling to Yahoo or raising a fresh round, it had better hurry up."

This article available online at:

http://www.theatlantic.com/technology/archive/2010/05/sharing-the-place-based-social-media-market/56378/