Foursquare Scores Microsoft Double Whammy: Licensing Deal and $15 Million Investment

Though somewhat overshadowed by Microsoft’s appointment of Satya Nadella as chief executive, the news of the company’s $15 million investment in Foursquare, alongside a licensing deal, is nevertheless more than noteworthy.

While not giving information on the terms of the licensing deal per se, Foursquare explains in a blog post that its hyper-local data will be used to provide insights, or “contextually-aware experiences,” to users of Windows or Windows Phone OS devices. As part of that, Bing users will also benefit from the enrichment of information when they run searches: Foursquare’s places recommendations will be served to them seamlessly via the platform. A Microsoft representative hardly gave more details on the deal by saying that it is “a multi-year commercial and technical partnership.”

According to the mobile localization startup, their database has now clocked in 5 billion check-ins and has more than 60 million places registered. That is what Microsoft has also invested into, for the price tag of $15 million.

At the moment, Foursquare seems to have lost its “hype” status with the “in” crowd that it had attracted at the beginning, but the service is therefore more interesting to brands, marketers, and advertisers, as it reaches a bigger, more diverse audience. Brands have understood that, and the likes of American Express have been partnering with the startup to serve special offers.

Nationwide local services have also jumped on the bandwagon: look at delivery apps like GrubHub and Seamless, for example. What better way to reach potential customers than by offering them deals and suggestions on where to go and what to order or eat?

The Foursquare app with local recommendations and deals:

So far, critics of the app have blamed it for a lack of vision and revenue stream, but Foursquare seems to have remained focused on building the product and securing the necessary funds to do so. Just in December, it raised $35 billion to boost its ad network. The Microsoft investment is closely tied to the licensing agreement: the money will be used to “double down on local search and experiences,” according to reports from The New York Times quoting Holger Luedorf, Foursquare’s head of business development, as saying. Microsoft doesn’t just pour money into a social-local-mobile (SoLoMo) app without having a supporting vision.

One cannot help but wonder though: Could this signal an exit strategy for Foursquare? It certainly is a strong signal for marketers to brush up their strategies across Microsoft properties for upcoming campaigns.

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