Facebook ends Deals after 4 months

That didn’t take long. After testing the waters that Groupon and LivingSocial dominate, Facebook has pulled the plug on Deals.

“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.”

In April, Facebook put everyone on notice that they were “testing the waters” of the daily deals phenomenon. Groupon and LivingSocial have had tremendous success offering social-media-only bargains that require a certain threshold of buyers to be reached before the deal is “on.”

This is a bad sign for the industry as a whole despite the 800-lb gorilla bowing out. If they weren’t able to make it work with their huge userbase, is it possible that the concept is a failed one? Wall Street will be watching closely as Groupon prepares for a $750 million initial public offering later this year after passing up on a $6 billion buyout by Google last year.

“I don’t believe this means daily deals are not a viable business,” siad Jeremiah Owyang of Altimeter Group. “It more suggests that large media and tech companies can’t just ‘turn on’ daily deals and expect them to work. It has to be more thoughtfully integrated into their existing product.”

We’ll find out for sure in the next year.