The potential privacy impact of Nearby appears to be constrained. As the Journal notes, “Twitter has allowed users to add their location to tweets since 2010. But that feature is turned off by default and must be turned on by the user.”
It seems doubtful Twitter would be foolish enough to make location opt-out instead, and then display everyone’s tweets with a Nearby-like fashion sans their explicit permission.
Nearby appears to be a test for the moment, meaning that the chance you can access it is low. But, do take a look, and post screenshots in the comments.
Recent moves by Twitter to change how its blocking feature worked unleashed a monsoon of complaints from users regarding the potential impact to their privacy, and ability to get rid of those users that they found repugnant. I suspect those same folks would balk at being automatically opted-in to a program such as Nearby.
However, potential foibles aside, the feature could find resonance with local marketers, providing Twitter with a fresh revenue stream to bolster its now-public financials.
It should be noted that the further Twitter strays into the local space, the more pressure it brings to bear on competitors in that area, such as Foursquare, and perhaps Path. Twitter is a huge player in social, and if it were to throw that heft into local, it could siphon advertising dollars from smaller, less well-funded competitors.