When Facebook announced that it was exiting the daily deal market, it wasn’t clear exactly why it was leaving after just four months or what it meant for the rest of the companies in the space, including category leaders Groupon and LivingSocial.

One person with plenty of thoughts on the subject is Boyan Josic, founder and CEO of Daily Deal Media, which provides data for the sector. He suggests that Facebook Deals is coming to a close because:

1. There was no point in Facebook competing with some of its key advertisers such as Groupon and other daily deal companies; and
2. Facebook has other irons in the fire when it comes to local advertising.

Today, review site Yelp.com, which offered deals on the side, announced that it, too, is scaling back its daily deal offerings and is reassigning some 15 staffers because consumers are being "overwhelmed by offers."

Josic spoke to Portfolio.com earlier this summer about the state of the daily deal market. We circled back with him Monday to gauge his reaction to the latest news about Facebook. Below are his insights into what really drove the social network's decision to get out of the offers space.

Portfolio.com: Does this announcement from Facebook mean that social media and daily deals are two entities that don’t work together?

Josic: Absolutely not. The two are not related. Social media and daily deals do work together. Facebook is in the business of advertising, and it had a major conflict of interest running daily deals of its own: Facebook's largest advertiser is Groupon, and a lot of advertising dollars come from [the daily deals] industry. Why compete with its largest customers?

Facebook realized that there may be better ways to connect and serve local businesses and that it didn't want to be in the business of "sourcing deals" and pushing products itself. This is very different from what it traditionally does. So I don't think its decision has anything to do with the potential of the daily deal industry—it just wasn't a fit for what Facebook does.

Facebook is an enabler, not a product pusher.

Do you think that the daily deal industry, which has attracted plenty of investment dollars, is going to turn out to be the next bubble?

If it continues without changes, then it could very well turn into a big bubble. It could turn into such a bubble and have such a drastic explosion that the whole model could disappear. But I think that’s a long shot.

I do think that a lot of the focus needs to be on regulation, third-party verification [assuring that deals for certain percentages off of regular prices are legitimate], and cleaning up some of these processes within the business, setting some standards within the industry, including how merchants are dealt with and what type of commission rates are used.