Facebook location service could kill Foursquare, ignite privacy issues

Social networking site expected to unveil location feature later Wednesday

If all the speculation pans out and later today Facebook unveils a location service for its site, it will excite some users, cause new privacy concerns and make for a really bad day for the folks at Foursquare Labs.

The Internet has been abuzz with conjecture that Facebook is getting ready to take the wraps off a location feature for the phenomenally popular social networking site. All of the speculation surrounds a hush-hush press conference that the company has set up at its Palo Alto, Calif., headquarters for early this evening Eastern time.

Social sites with location-based services, like Foursquare and Gowalla, have been picking up a loyal following in the past year. Facebook apparently wants a piece of that expanding pie.

"If Facebook adds geolocation features, it would open up a whole new world of functionality for their users," said Dan Olds, an analyst for The Gabriel Consulting Group. "It would allow users to easily let their friends know where they are or where they've been. Facebook can also easily add functionality that equals what is available from companies like Foursquare, and that would inevitably lead to commercial tie-ins and more revenue for Facebook."

Foursquare, a year-old social networking site, enables users to share their locations with their friends. For instance, when a user walks into a restaurant, she can "check in" on her mobile device and friends will see her location pop up on a Foursquare map.

Gowalla, another major player in the location arena, is a location-based travel game that rewards users for visiting everyday and exotic locations.

It's not yet clear what Facebook would do with a location service. Will it mirror Foursquare or will it offer up games like Gowalla?

Analysts say it could be a boon for Facebook, as well as really bad news for location-based competitors.

"If successful, this would further embed Facebook into the lives of its users and could hold off what appears to be a declining interest in the service by making it new and fresh again," said Rob Enderle, an analyst with the Enderle Group. "Depends how successful this is but, assuming success, FourSquare likely becomes redundant over time."

Olds also noted that Facebook's entry into location services could spell trouble for the folks at Foursquare.

"If Facebook does add this functionality, it will probably destroy the smaller companies already in this space," added Olds. "Facebook just has too many users for smaller sites like Foursquare to effectively compete. They might survive for a while, but they will definitely have to make radical adjustments to either their services or their business model in order to keep out of Facebook's way."

However, Olds also noted that Facebook will have to tread cautiously with any location-based service if it doesn't want to create another privacy commotion.

Many users have been angry and frustrated in recent months over Facebook's privacy policies , as well as its privacy controls . Both Olds and Enderle said Facebook will have to make sure that users - particularly those who don't want to broadcast their whereabouts - will have their privacy protected.

"If this isn't handled well, it could easily result in PR problems we have already seen seem trivial by comparison," Enderle said. "Location-aware services, if misused, could identify vulnerable children or unmonitored properties, either of which could result in catastrophic events."

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