Going Geo-Loco: Lessons on the Mad Scramble to Exploit Location Data

7/22/10Follow @wroush

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Brightkite, Where, Whrrl, and Yelp. So startups have to give users a reason to want to check in with their service rather than someone else’s. “Can you get valuable services from it, where are your friends checking in—it’s all that other stuff that creates value,” Wilson commented.

If Facebook ever gets serious about location, it could be game over for a lot of other companies. The social networking mega-site said yesterday that it had passed the 500-million-user mark. And there have been hints in the past that it’s working on location-related features—including, perhaps, a way for users to check in at various venues, the same way they do on Foursquare or Gowalla. Notwithstanding the unique value that those startups may provide to their communities, it’s hard to see how they will be able to compete with Facebook for monetization opportunities such as location-based advertising, several panelists said. “The first week they launch check-ins, [Facebook] will have more check-ins than any other service in the history of geolocation,” noted Lindstrom. “Having two million users on Foursquare becomes irrelevant in that scenario.”

How location-driven services handle privacy issues could make or break them. Many people who are perfectly willing to share status updates or photographs with everyone over social networks like Facebook may be more choosy when it comes to sharing their current location. Since the existing rules don’t necessarily apply, providers of location-based services will have to provide users with fine-grained privacy controls, and should study the experiences of companies like Facebook that have regularly dealt with privacy challenges, several speakers argued. Startups building services from scratch may have an advantage here, Wilson said: “These large services like Twitter and Facebook and Google and Yahoo and Microsoft may not be capable of building private location-based services, because their social graphs are not tuned for this kind of activity.”

It’s still early days, and there’s plenty of room for innovation by startups. Evans of Close.ly said the big Internet companies like Google and Facebook have “huge blind spots” when it comes to location. “This isn’t just about geography, it’s about a convergence of three swirling worlds—local, social, and real-time,” Evans said. “The probability that a big company is going to get it right is getting smaller and smaller. Nobody knows what will dramatically engage the user next…there are huge markets that haven’t even been touched.”

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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