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Colin Gillis Comments: Facebook Unveils Location-based Feature Dubbed 'Places' - Wall Street Journal

Facebook Inc. on Wednesday introduced a location feature dubbed "Places" that lets users "check in" and tell friends where they are, a move that could give the social networking giant a jump on Google Inc. (GOOG) in the emerging but potentially lucrative local advertising market.

The new "check in" feature thrusts the Palo Alto, Calif.-based social network into a geo-location arena that has been popularized by Foursquare Labs Inc. and Gowalla Inc., services that let people tell friends when they are visiting restaurants, bars, malls and other public places. Users typically get discounts and other incentives to encourage frequent check-ins.

Speaking at an event at the company's Palo Alto facilities, Facebook Chief Executive Mark Zuckerberg declined to comment when asked how the company planned to monetize Places. Industry analysts have said they expect the social network to one day leverage user location data to sell more ads.

"Location is a highly monetizable variable," said BGC Financial analyst Colin Gillis. "It's yet another reason why Facebook is Google's biggest threat." But Places could also renew concerns about Facebook's commitment to user privacy. Critics have noted a pattern in which Facebook introduces new features or redesigns existing ones in ways that expose user information to a much broader group of members.

Acknowledging the sensitive nature of the issue, the social network said Places includes special privacy controls to give people control over who can see where they have "checked in." Unless a person specifically changes their privacy settings only their friends will see where they have "checked in," the company said.

Facebook said Places is available now in the U.S. on through an iPhone app and on its mobile Web site. The company has said more than 150 million of its 500 million members access Facebook from their phones or other mobile devices.

Facebook also said it is releasing a set of software tools, known as APIs, that third-party developers may use to build their own location-based services for Facebook users. Executives from Foursquare, Gowalla and recommendation site Yelp were on hand for the announcement.

Facebook's push into location-based features is yet another indication of the impeding collision between it and Google. The rapidly-growing social network is widely seen as a significant threat to Google because the more time Internet users spend socializing with friends, the less time they are using Google's search engine and clicking on the Web giant's ads.

Google is also positioning itself to take aim at local advertising through its GPS-capable Android mobile phone software, features such as its "Near Me Now" app and a series of new mobile ad formats.

With the "My Location" feature in Google's mobile maps app, the company can serve ads based on location signals from cell towers, Wi-Fi hotspots, or GPS as long as the phone subscriber has consented to the use of their location information. Users can turn off "My Location" at any time.

BGC's Gillis said a key challenge for Facebook and Google will to make consumers comfortable about broadcasting their whereabouts.

The Web giants clearly have incentive to try. Location-based ads are an emerging and potentially lucrative new form of advertising that enables marketers to target consumers with ads for nearby goods and services.

For example, a pedestrian in New York City might use a mobile phone to search for a pizzeria in the neighborhood. Local advertisers, in turn, could then send the consumer ads for their businesses, replete with discount coupons and other offers.

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