Facebook announced it will end its daily deals program, which it began testing four months ago, leaving pioneers like Groupon to continue their dominance in the emerging market.
“We think there is a lot of power in a social approach to driving people into local businesses,” said the social network in a statement. “We’ve learned a lot from our test and we’ll continue to evaluate how to best serve local businesses.”
Facebook, the world’s largest social network with its over 750 million members, launched Facebook Deals in late April, bringing competition to daily deals leader Groupon and rival LivingSocial.
The Palo Alto, Calif.-based company debuted its programs in five cities Atlanta, Austin, Dallas, San Diego, and San Francisco, in a bid to expand its revenue stream beyond advertising and carve out a niche in the growing online bargain market.
Facebook aimed to differentiate its service by emphasising the social nature of its daily deals, tailoring deals geared toward groups, like theatre tickets, rather than solitary single purchase deals. Group deals leveraged Facebook’s ability to easily recommend, coordinate and purchase the deal all on the social networking site.
The news comes as daily deal pioneer Groupon is reportedly working on an initial public offering for later this year, and two months after Google announced its own “Offers” discount program.
Google has signaled a desire to jump into the daily deals market, underscored by its unsuccessful bid last year to buy Groupon for an unprecedented $5.3 billion. At the time, the Chicago-based company’s market share had skyrocketed to $25 billion, prompting it to spurn Google’s offer.
Whether Facebook’s decision to halt trials on its Deals indicates the social network is withdrawing from this segment completely or pulling back and tweaking the program remains to be seen. Regardless, its decision leaves daily deal leaders Groupon and LivingSocial more room to consolidate their positions in the market they helped shape.