Facebook quits the daily deals game after four months

Facebooks big bid to take on Groupon and other deal sites is coming to an end, at least for now. The company said in a statement to Reuters that it is killing Deals in the coming weeks after four months of testing.

We think there is a lot of power in a social approach to driving people into local businesses, Facebook said in the statement. Weve learned a lot from our test and well continue to evaluate how to best serve local businesses.

Its an interesting turn of events considering how much interest went into Facebooks offers effort. We talked about how the power of Facebook Deals because of how social it could be, as opposed to Groupon and Living Social. But it looks like the deals business is harder than we thought, especially if its not unique enough.

This would appear to be good for Groupon: As it prepares for its IPO, its now lost one big competitor. Facebooks exit from the space might also favor incumbents who are already committed to the model and have those relationships with consumers and merchants. And it might underscore how much manpower is needed to make something like this work.

Or does this signal some more inherent weakness in the larger deals model? Itll be interesting to get more reasons as to the decision. Facebook also pulled back on its check-ins and is closing its Places tab on Facebook mobile ! in favor of a broader tagging system that allows users to add location tags to any action.

Its still early in the daily deals business and with a lot of questions swirling around Groupons IPO, we still dont know how viable this will be over the long haul. But at least for now, theres one less competitor in the game.

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