At their recent mobile event, Facebook cleared up their mobile strategy and emphatically denied that they are working on any kind of mobile phone. With that said, they did announce a new Deals feature that will work in concert with the recently launched Facebook Places. As soon as I read about this, I thought that FourSquare should be really worried, because as much as I am still not completely on board with location based services like this, when you start to pair it with things that most people consider value added then it’s worth taking notice. FourSquare has similar capability, but the sheer size and reach of Facebook makes this a game changer.
The problem that I have will all of this is that Facebook execs said that they don’t really have any real concrete plans for generating money from this new feature and that worries me. Don’t get me wrong, there are all kinds of ways that I think Facebook “could” make money with Deals, I am just concerned because they haven’t thought of them too. I think that Facebook has a ridiculous amount of users (though only 200 million mobile users) and a reach unlike anything else, but can somebody tell me what their real business model is? How do you plan to generate the kind of revenue to justify their ridiculously crazy valuation? Does Facebook have the potential to be a cash cow, absolutely, will they realize that potential before something else steals the show, I’m not sure.
Facebook announced a new feature that automatically uses a Facebook member’s user name and password to log into another company’s mobile app which is an attempt to succeed with something called single sign-on where many others have failed. Facebook also said that it would allow other companies to tap into its database of location information, including the friends and businesses that are near a Facebook user, as a way to spur development of a new generation of mobile apps. That perked your ears didn’t, seems like a privacy nightmare waiting to happen.
Facebook has already lined up 22 major consumer companies — including Macy’s, American Eagle Outfitters, Chipotle Mexican Grill Inc, and the Gap — which will give away 10,000 pairs of jeans to customers who “check in” on Places this Friday.
I commend Facebook for continuing to expand, but they need to start deliver earnings that warrant all this love and attention they are getting. While they are at it they need to recommit themselves to privacy and security, especially with location based services like Places. I hate to say it but I have to wonder how long it will be before the first Facebook Places stalking tragedy of some sort happens or FourSquare for that matter. People don’t seem to understand that while it’s great to let your friends know where you are, with a set of insufficient privacy controls it’s just a matter of time before the low lifes and crooks of the world find a way to use it for nefarious purposes. Personally, I think the concept is great I just don’t know if the application of the concept can be done in a way that protects the people using it and maintains their privacy.