Facebook goes head-to-head with Groupon

With online deals getting bigger everyday, Facebook is getting into the local deals business.

And that move by itself as per analysts is enough to make Groupon, a website that is localized to major geographic markets worldwide look nervously over its shoulder and further strengthen Facebook.

Facebook Deals "are about to get better with friends" according to a new landing page that aims to promote the social network's answer to Groupon, The social network first announced Facebook Deals last November.

It was a feature that enabled local businesses to offer users deals when they go to their Facebook page.

However yesterday, Facebook upped the ante.

"We're working to make it easier to find fun things to do with your friends and connect with local businesses," Facebook wrote today on its Wall.

"We're testing a new Deals feature that brings you offers from nearby businesses, which you can share with your friends," it said.

The new feature is currently only available for users in Atlanta, Austin, Dallas, San Diego and San Francisco.

Facebook will be helping businesses send deal offers directly to users, which is what Groupon has made its name doing.

"For Facebook, this is smart," said Ezra Gottheil, an analyst with Technology Business Research.

"Facebook would like to be users' entry point to the entire Web -- communications, content, game-playing, etc. As long as additions don't obscure the primary experience, and I don't see any reason this would, every addition removes one reason to leave Facebook World, Gottheil added.

But this has got to be concerning news for Groupon, the company that quickly rose to online fame as a localized deal-of-the-day Web site.

In about the last six months, there has been a lot of excited talk about Groupon, which helps businesses reach directly out to individual customers.

Groupon is designed to e-mail users with information about what to do in their cities, along with bargains and sales offers.

Facebook has already started promoting its Groupon-like service.

The company has pushed a new story with the headline "Deals on Facebook. Now Better With Friends" to the Facebook News Feed.

It links to a new Facebook Deals landing page at facebook.Com/deals, which says "Coming Soon: Deals Are About to Get Better with Friends" at the top.

The goal is to get users to subscribe to updates for Facebook Deals, and to invite their friends to subscribe too.

Subscribers will soon get Facebook News Feed updates about nearby promotions.