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Facebook goes head-to-head with Groupon

Social network mirrors Groupon, sending local deals offers to users

March 16, 2011 07:27 PM ET

Watch out, Groupon. There's a new deal-maker in town.

Facebook is getting into the local deals business. And that, say industry analysts, should be enough to make Groupon look nervously over its shoulder.

The social network first announced Facebook Deals last November. It was a feature that enabled local businesses to offer users deals when they go to their Facebook page.

Today, Facebook upped the ante.

"We're working to make it easier to find fun things to do with your friends and connect with local businesses," Facebook wrote today on its Wall. "We're testing a new Deals feature that brings you offers from nearby businesses, which you can share with your friends."

The new feature is currently only available for users in Atlanta, Austin, Dallas, San Diego and San Francisco.

Facebook will be helping businesses send deal offers directly to users, which is what Groupon has made its name doing.

"For Facebook, this is smart," said Ezra Gottheil, an analyst with Technology Business Research. "Facebook would like to be users' entry point to the entire Web -- communications, content, game-playing, etc. As long as additions don't obscure the primary experience, and I don't see any reason this would, every addition removes one reason to leave Facebook World."

But this has got to be concerning news for Groupon, the company that quickly rose to online fame as a localized deal-of-the-day Web site.

In about the last six months, there has been a lot of excited talk about Groupon, which helps businesses reach directly out to individual customers. Groupon is designed to e-mail users with information about what to do in their cities, along with bargains and sales offers.

The fledgling company has become a standout example of how the social Web is re-engineer old marketing and advertising models.

And that has turned some heads, even among major online companies like Facebook and Google.

Word hit last December that after Google and Groupon had reached advanced acquisition negotiations and Google is said to have offered $6 billion for the two-year-old company, Groupon rejected the offer.

At the time, industry analysts figured that Google either would make another run at buying Groupon or it would it would develop its own Groupon-like service.

Now it seems that Facebook has beat Google to the punch, another salvo in Facebook's increasing rivalry with Google.

"This is another step in Facebook's evolution from purely people-centered social networking toward both people-centered and content-centered," said Gottheil. "Many things Facebook has done contribute to this trend, but every addition strengthens its position."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at Twitter @sgaudin or subscribe to Sharon's RSS feed Gaudin RSS. Her e-mail address is sgaudin@computerworld.com.

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