Facebook Wants to be the Location Lifeblood

Facebook is a smart company. Possibly one of the smartest companies we’ve ever seen, or will ever see in our lifetime. It’s for one simple reason–they want to be important, and they’re good at it.

Facebook thrives on being important. And now that they’re the largest social network in the world, they can proudly proclaim themselves “the most important.” Without a doubt.

But in the past year a new social media ecosystem has sprouted up–location-based services, e.g. Foursquare, Gowalla, and the like. And tweeting back and forth with my good friend @bigguyd just now, I realized that Facebook’s strategy is much larger than either of theirs. They don’t want to put them out of business, or buy them out, or pound them into obscurity. They want these other services to thrive, but only if they play by Facebook’s rules.

Look at what Facebook has done with games on their network. When developers started creating simple games for the network people initially dismissed it as nothing but a distraction. Users hated all the application notifications. They were annoying, they were everywhere, they ruined the user experience. But Facebook is important to us, and no one quit.

After a certain amount of time, everyone got used to applications being there and developers started getting more aggressive with their games. And then came Farmville. And in 2009 companies like Zynga were seeing revenues in the hundreds of millions of dollars.

And they were also totally, without a doubt, 100% reliant on Facebook for survival.

That’s why Facebook just entered the “location wars.” They don’t want to take over the location network craze. They want to own it. They want to force everyone else to build on their system, making them the ultimate backbone of the location-based social network realm. By creating a dumbed-down, ultra-simplified check-in based service, they created a simple and flexible platform that developers can use. By keeping the stream of data flowing openly both ways through their platform, they’re enticing both new and old developers to jump on it and take advantage of their 500 million ready and willing users who are already plugged in and not leaving any time soon, if ever.

In essence, Facebook delivered a captive market of over 500 million users to Foursquare, Gowalla, and myriad other developers on a silver platter. And as those developers become increasingly reliant on Facebook’s Places platform, Facebook will begin taking a cut of all the revenue and everyone–within reason–wins.

Is it diabolical? A little. Is it not-exactly-a-good-thing for the ambitious, startup LBS developer? Yea, kinda. Is it abso-effing-lutely brilliant? You bet it is.