Facebook Buys Foursquare Competitor in Location-Based Play

Facebook recently announced plans to nix its Foursquare-like Places feature, but the social-media giant apparently has no plans to exit the popular geo-tagging space. Facebook reportedly has snapped up a location-based service to better equip its location-based tool chest.

CNN Money was the first to report that Facebook has acquired Texas-based Gowalla for an undisclosed amount. Facebook has publicly declined to comment, but CNN reports that the tech will fold into Facebook's Timeline feature.

Gowalla launched in 2009 as a direct competitor to Foursquare, the leading service in the mobile app space that lets you check in to various locations, find things to do in your area, and even tap into coupons and discounts. Gowalla promises users can "discover our world's most loved places while sharing the places that mean the world to you."

"The ink on the deal is not dry, so our holding pattern is that we do not comment on rumors and speculation. I have another e-mail penned that was ready to send you today, assuming you would get this news before the story was officially released," Gowalla CEO Josh Williams wrote in an e-mail to investors that was published in The Wall Street Journal's All Things D. "But now it is all over Twitter, so you have likely heard. A longer email will be sent soon. Until then, I am so very grateful for what you have done to make Gowalla a success."

Snapping Up Talent?

When Facebook announced it was nixing the mobile-only Places feature, which allowed users to check in to places they visit using the Facebook smartphone app, the social-media company also indicated users could add a location on anything they do on Facebook.

Facebook didn't offer any explanation for axing the feature, whose own Facebook fan page has more than 250,000 fans. Some analysts saw the decision as a boon for Foursquare while others figured Facebook had other plans. Gowalla could be part of those other plans -- and it appears the battle between Foursquare and Facebook may be just beginning.

"At one point Facebook flirted with trying to buy Foursquare. Now the company has acquired one of Foursquare's former competitors," said Greg Sterling, principal analyst at Sterling Market Intelligence. "The acquisition is more for the team and talent than the Gowalla business. Foursquare realizes the strategic importance of mobile. However it's unlikely that the Gowalla brand and current app will survive."

Facebook's Hiring Spree

It remains to be seen how Facebook will integrate Gowalla technology into its Timeline feature -- or if the acquisition is a pure talent play. But one thing is certain: Facebook is on a hiring spree, and acquiring Gowalla's founders is just the beginning. At a news conference in New York City on Monday, Facebook announced plans to expand in New York City.

"We are trying to grow at a clip that will allow us to get the very best people and integrate them," Facebook COO Sheryl Sandberg said at the press conference, according to the BBC. "We will be adding thousands of employees in the next year."

The rapid expansion is likely tied to Facebook's planned initial public offering, or IPO. A Facebook IPO in the second quarter of 2012 would overshadow the rising tide of social media IPOs in 2011. Analysts suggest Facebook could raise as much as $10 billion when it goes public next year.