Foursquare deal could be a goldmine for Yahoo

August 22, 2013: 2:36 PM ET
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Yahoo and Foursquare are reportedly in talks for a data partnership.
NEW YORK (CNNMoney)

Big data is the latest super-hot tech trend, and Yahoo wants a piece of the pie.

Marissa Mayer & Co. are reportedly courting Foursquare for a partnership involving the startup's valuable trove of location data.

The Yahoo-Foursquare talks are "still fluid," according to the Buzzfeed article, which didn't have details about what such a partnership would look like. Yahoo (YHOO) and Foursquare declined to comment.

A deal would make sense for both companies: It could provide Yahoo with data that has the ability to improve various products in its vast portfolio, and it would give the often-maligned Foursquare a huge financial opportunity.

Yahoo could easily use Foursquare's data to serve up search results, content and ads based on where is a user is or where they've visited in the past. Microsoft's (MSFT) Bing.com added Foursquare to its results last year.

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But if a Yahoo-Foursquare deal takes place, Yahoo has the potential to integrate Foursquare's data more extensively than Microsoft has. Foursquare's mapping and mobile technology could prove valuable to Yahoo's dozens of websites, for example.

Yahoo CEO Mayer has tried to re-define Yahoo as a company devoted to personalizing the Web for its users, from content to email to ads. She wants Yahoo products to become part of users' "daily habits," and she's particularly interested in "localization," mobile, social and video. Foursquare clearly fits into three of those four focus areas.

Foursquare, founded in 2009, lets users "check in" to venues like restaurants to receive tips and discounts. It was once the buzziest startup in Silicon Valley, but for the past few years CEO Dennis Crowley has fought the idea that his company is merely just "check-ins and badges."

Foursquare has amassed a whopping 4 billion check-ins from its 35 million global users, and the company has worked to leverage that user-generated data.

On the user side, Foursquare can tell a beer-guzzling Chicagoan who just got off a plane in Hamburg, Germany, where to go for the best brews in the city. For businesses, Foursquare can tell local spots how their foot traffic compares with competitors, whether it's better to keep happy hour going until 8 p.m., and even how well the venue fares when it's raining out. Those finely tuned recommendations, based on deep sources of data that users are happy to turn over, could be of great use to Yahoo.

Judging from past deals, Foursquare could make a boatload on these types of partnerships. Earlier this summer, Google (GOOG) bought social-mapping service Waze for a reported $1.3 billion. The hefty purchase price shows just how valuable billions of points of location data can be.

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