Why Foursquare’s new feature makes a Google takeover offer even more likely

location-map-610x407

Foursquare, the location-based service that started with check-ins and badges and has expanded to include recommendations, launched a new feature Thursday that brings its goal of being the “location layer of the internet” even closer to reality — and the company also happens to be the subject of investment rumors as well, with Microsoft reportedly interested in taking a stake. But if anything, Foursquare’s new direction makes it even more obvious that Google is — or at least should be — the most likely home for the startup’s technology.

After five years of building its location service, Foursquare is getting a little long in the tooth for a startup, and the New York-based company has been the subject of some criticism for failing to show signs that it can monetize the service adequately — a wave of skepticism that seemed to peak when the company did a controversial debt issue in its last round of financing, which many observers took as a sign of desperation.

Screen Shot 2013-08-29 at 8.38.29 PM

The value of four billion check-ins

More recently, however, Foursquare has bragged about how its advertising-related features are starting to pay off — the company says its advertising revenue was at $2 million last year and is apparently doubling every quarter — and about how its database of more than 4 billion local check-ins and recommendations is in demand, with developers and other services like Instagram building it into their services. “I think we’ve proven our business model,” chief revenue officer Steven Rosenblatt told Bloomberg.

local marketing

According to Bloomberg, the company is currently in talks with a number of its debt-holders about converting their debt into equity, and is also discussing a potential investment with a number of large technology firms. Microsoft is said to be the front-runner, although Yahoo — whose new CEO, Marissa Mayer, allegedly wanted to acquire Foursquare when she was at Google — is also rumoured to be interested in possibly making a bid. As always, it’s possible that the Foursquare rumors may be a stalking horse, designed to either stir up potential interest in the company.

Regardless of how much truth there is to the Microsoft story, however, I think there is pretty compelling argument for why Google should step in and acquire the company — and the launch of its new local recommendation feature makes that even more obvious.

As my Gigaom colleague Lauren Hockenson has described in a post about the new feature, it essentially bypasses the Foursquare app and provides a real-time recommendation about nearby food or services as a notification on an Android (and eventually iOS) phone. Foursquare founder Dennis Crowley has said that this feature has always been part of his vision for the service, but the company has only been able to execute on that vision recently.

Screen Shot 2013-08-29 at 8.54.24 PM

Foursquare is made for Google Now

When I heard Crowley talking about this potential feature earlier this year, my first thought was that it sounded like what Google is trying to do with Google Now — the mobile service that provides real-time notifications of things like traffic conditions, flight delays and a host of other data. Some say they find this kind of personal assistant feature creepy, but as I mentioned in an earlier post, I think it is incredibly useful. It may be the single most useful thing Google has ever launched, and that’s saying something.

Providing useful local recommendations about food and other services, the kind that Foursquare’s feature is designed to generate, seems like a natural extension of what Google Now does — and it helps explain why Marissa Mayer wanted to buy the company when she was in charge of local services at Google (ironically, Google acquired Crowley’s previous location-based startup, Dodgeball, in 2005 but eventually shut it down).

Screen Shot 2013-08-29 at 9.03.28 PM

The fit becomes even more obvious when you consider that Google’s local recommendation features still need a lot of help, as competitor Jeremy Stoppelman of Yelp pointed out recently. The company has tried repeatedly to build local services under a bunch of a banners (anyone remember Latitude? Hotpot?) and has mostly failed to get any traction, but it’s clear that it wants to expand its local data in as many ways as possible — that’s part of the reason it spent $1.3 billion to buy social-traffic app Waze.

There’s no guarantee that Google is in the market for Foursquare, of course, or that the startup’s board and other shareholders would accept an offer. But there’s no doubt in my mind that the two would make a great combination. I for one would love to get Foursquare-style recommendations in my Google Now cards.

Post and thumbnail photos courtesy of Flickr user Dunechaser, Shutterstock / Zinchuk Oksana

loading

Comments have been disabled for this post