Rumors of a Yahoo takeover of Foursquare have been around for a while. The latest gossip surrounds a possible $900 million bid for the local search app.
The purchase would represent one of Yahoo's biggest bets on mobile since Marissa Mayer became CEO in 2012. Foursquare provides local search recommendations but the New York start up also allows users to "check in" to a location letting their friends know where they are.
According to some TechCrunch sources the deal is already done, but there has been no official confirmation from either company, so this could be just another rumor, but there's a reason the story keeps coming up.
Firstly, Marissa Mayer and Foursquare CEO Dennis Crowley are known to be friends, and we know Mayer is keen to move Yahoo more into the mobile space. The real value of Foursquare is the location data is has from its tens of millions of users. Google acquired traffic navigation app Waze for $1 billion which had roughly the same number of users, so the $900 million price tag looks like it could be a realistic number.
When Yahoo acquired Tumblr, AllThingsD reported that Mayer had watched the progress of Tumblr and Foursquare closely while she was still at Google. This is what first prompted rumors of a Foursquare buyout. It's also likely that Crowley would rather sell to Yahoo than Google. When his first company Dodgeball was bought by Google and then shut down, Crowley was said to be extremely unhappy, so he is unlikely to risk a repeat.
Foursquare's growth has stalled somewhat as a company. Last year it split its functionality into two apps. It launched Swarm to manage customer check-ins while keeping Foursquare as a local search recommendation app. Foursquare has hovered around the top 25 travel apps on the market without breaking into the top 500 apps overall and Swarm has been in gradual decline, dropping to 146th in social networking.
But it is the database of location data that is Foursquare's true value. The company says that over the past six years there have been 7 billion check-ins, 70 million tips, 55 million people, 65 million places and 90 million "tastes" logged through its apps. Foursquare also has some key partnerships. It powers location tagging for Twitter and is behind local search reviews on Microsoft's Bing.
The other factor powering the rumor is that Yahoo is currently cash rich thanks to the sale of its Alibaba shares, which generated $9.6 billion late last year. The move looks like it could be a good deal for both companies but we'll just have to wait and see if anything comes of it.
