Facebook quits the daily deals game after four months

Facebook’s 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. “We’ve learned a lot from our test and we’ll continue to evaluate how to best serve local businesses.”

It’s an interesting turn of events considering how much interest went into Facebook’s 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 it’s not unique enough.

This would appear to be good for Groupon: As it prepares for its IPO, it’s now lost one big competitor. Facebook’s 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? It’ll 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.

It’s still early in the daily deals business and with a lot of questions swirling around Groupon’s IPO, we still don’t know how viable this will be over the long haul. But at least for now, there’s one less competitor in the game.