Nov 4, 2010
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Facebook revs up mobile effort with Deals

Nov 4, 2010

PALO ALTO, Calif (Reuters) - Facebook, revving up its mobile services for the 200 million people who now use the world's largest social network on their phones, has created an avenue for retailers from Macy's to Gap Inc to offer deals to nearby customers.

Gap's page on Facebook

The new Deals feature builds on three-month old "Places" -- which lets users broadcast their location, among other things -- and lets merchants shoot special offers to Facebook mobile users who "check in" from the vicinity of their stores.

The company -- which shot down rumors on Wednesday it was developing its own mobile device -- is stepping up efforts to make its 500-million-member social networking service available to people when they are away from their personal computers.

By offering deals, Facebook could entice more people to use its location-based check-in service while opening up new revenue opportunities for Facebook.

Facebook executives said the company had no concrete plans for now to make money off of this new feature, but acknowledged that there could be interesting ways to generate revenue from the deals program down the road.

CEO Mark Zuckerberg said on Wednesday that the social network has tripled its number of mobile users to about 200 million now, from 65 million at the same time last year.

"There are things that you can do on mobile phones that you can't do on the normal Web," said Facebook CEO Mark Zuckerberg in a interview with reporters following the briefing at the company's headquarters on Wednesday.

"People have their phones with them all the time, so a lot more usage is happening on phones," said Zuckerberg. He added that most of the specialized applications for mobile devices today don't adequately integrate social networking features.

Facebook announced a couple of new features to weave its service into other companies' mobile apps, including technology that automatically uses a Facebook member's user name and password to log into another company's mobile app.

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.


Mixing social networking and location services presents Facebook with delicate privacy challenges, including what some say are safety risks involved in people broadcasting their physical location.

The company is already struggling with a number of privacy issues. It admitted on Wednesday that some of its applications violated the social networking company's policies against sharing user information, and promised to fix the problem.

Facebook executives at the press briefing on Wednesday said that the new mobile features did not change any of Facebook's existing privacy settings and that only information that users have opted to make publicly viewable would be accessible by third-party application makers.

Forrester Research analyst Augie Ray wrote in an email that Facebook would have to work hard to earn users' trust, given recent privacy concerns, before large numbers of people would feel comfortable with some of the new mobile features, like logging on to other mobile apps with their Facebook information.

He said Facebook could reap new revenue from its Deals service by allowing certain merchants to make their deals stand out from the crowd.

"Within a year or two, businesses will be bidding to have their deals gain more attention on the Facebook mobile platform, just as they do today in Google Adwords," wrote Ray.

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.

The last time the U.S. clothiers launched a Web promotion -- $50 worth of merchandise for $25 on e-commerce coupon site Groupon, in its first national marketing event -- some 440,000 people took them up on it.

Facebook is one of several established Web companies, including Google and Yahoo, expanding their businesses to mobile devices as people increasingly surf the Web and send emails on mobile phones.

While there have been media reports that Facebook is secretly developing its own mobile phone, Zuckerberg said that such a strategy would not make sense for Facebook.

"Our goal is not to sell anything physical. Our goal is to make it so that everything can be social," said Zuckerberg.

"It would be pretty silly for us to go after a strategy that focused on selling small number of phones ... and risk alienating all the partners that we need to work with in order to make all these places more social," he said.

(Reporting by Alexei Oreskovic and Edwin Chan. Editing by Maureen Bavdek, Robert MacMillan and Bernard Orr)

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