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Why A Yahoo-Foursquare Deal Would Make Total Sense (If It’s True)

Foursquare and Yahoo would be a match made in geosocial heaven.

Why A Yahoo-Foursquare Deal Would Make Total Sense (If It’s True)
[Photo: Chris Ratcliffe/Bloomberg via Getty Images]

Is Yahoo about to acquire Foursquare? It’s hard to say. Some anonymous sources tell TechCrunch yes, while other anonymous sources at Re/code want us all to chill. At the moment, the matter remains little more than a standard tech industry rumor, with little verifiable information to go on.

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But if a deal does go through, it would make sense. A year after splitting its social app in two, Foursquare stands at a bit of a crossroads as it tries to reinvent itself. And its underlying location data is extremely valuable. Meanwhile, Yahoo is similarly trying to chart a new way forward under the leadership of Marissa Mayer. How? In large part, by taking the company in a more mobile, social direction. What a perfect fit.

For Foursquare, an acquisition of some kind feels almost inevitable, whether it’s by Yahoo or someone else. Six years after launching, the social location startup is struggling to make itself a household name. A year ago, the company pivoted away from the gameified geolocation social network it had launched with so much fanfare at SXSW in 2009. Instead, Foursquare turned its focus to personalized, contextual local recommendations–a sort of discovery engine for nearby places. At the same time, the “check-in” button long central to the Foursquare experience was quarantined into its own app called Swarm, where stickers would replace badges and nobody would ever become the mayor of anything again.

It’s easy for some to look at Foursquare today, shrug and ask, “Wait, what are they doing again?” I didn’t really get the whole Swarm thing. I haven’t used it in a while. But overlooking Swarm overlooks the bigger value of Foursquare: location data.

While much larger companies have been building out maps and location services of their own, Foursquare has been quietly amassing one of the most robust and intelligent geolocation databases on the planet. Its data has gotten so good, in fact, that Twitter–a company with plenty of engineering muscle of its own–recently paid an undisclosed sum to license Foursquare’s location data to power its own geotagging feature. It’s a partnership similar to the one Foursquare used to have with Instagram before the photo-sharing app was acquired by Facebook. Once that happened, Instagram switched from Foursquare’s API to Facebook’s own location database (which turned out to be palpably worse).

Foursquare CEO Dennis Crowley and his team are still hard at work perfecting their consumer apps, which continue to amass valuable location data and have other future potential value, particularly when it comes to travel. But make no mistake about it: The data is what Yahoo–or any other potential buyer–would be after.

If Marissa Mayer is serious about turning Yahoo into a more social, mobile-forward company, Foursquare is exactly the type of company she could use to help do that. As Harry McCracken points out in our May cover story on Yahoo, Mayer’s strategy for turning around the company has relied on acquiring smaller companies that do various jobs better than Yahoo could do itself.

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Indeed, Foursquare already powers location features on Flickr and its mobile app, so Yahoo has some experience working with Foursquare’s data and team. By acquiring Foursquare outright, Yahoo would be better equipped to weave that geolocation data even further into its own products and even build new things on top of it. They could even try to inject new life into the Foursquare and Swarm apps themselves, much as Yahoo has done with its revamp of Flickr.

Of course, the prospect of Yahoo acquiring Foursquare is nothing more than a rumor at this point. The typically well-sourced Peter Kafka at Re/code seems pretty confident that , despite an earlier report from TechCrunch that a $900 million deal may be imminent.

If anyone winds up acquiring Foursquare, they would be buying so much more than a pair of apps. As we’ll explore in an upcoming feature on the state and future of Foursquare, Crowley and his team have been busy building out some unique technology that will power the company’s future, whatever form it may take.

In the meantime, let the rumors fly.

About the author

John Paul Titlow is a writer at Fast Company focused on music and technology, among other things.

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