Social Networking, Groupon | featured news

This story appears in the May 7 edition of Forbes magazine on page 150. Zynga, Facebook and all use an independent auditor that is simultaneously inventing the rules for social media accounting. Somewhere, Arthur Andersen is shuddering.

Compared to Groupon, which has enormous administrative costs and is hemorrhaging a lot of money, Zynga is a ruthlessly-run, well-oiled machine.

What happens when you cross the world's largest social network with one of the hottest business models in e-commerce? Facebook wants to find out. Facebook is launching a deals program Tuesday in five U.S. cities, following on the popularity of Groupon and other services that offer deep discounts - for example: $50 worth of food at a local eatery for $25.

Whoops.Looks like The New York Times has a little embargo breaking situation on their hands. (Which we love -- chaos!) They've just put up a story with the URL: http://bits.blogs.nytimes.com/2011/04/25/latest-rival-to-groupon-livingsocial-facebook-embargo-till-midnight/ (bolding mine). That page is obviously no longer found, but it was live for a bit. And it is a big one: Facebook's Groupon/LivingSocial "killer".

LivingSocial is in active talks with investors to raise around $400 million to $500 million to help fuel its expansion and keep up with rival Groupon.

Facebook will soon start testing a service to provide local discounts to its more than 500 million members, a move that will thrust the social network into direct competition with Groupon.

Services like Groupon and TheFind.com are using social media and other online tools to lure ever more customers.