One area of the technology sector could realize its huge potential in 2013, Silicon Valley's Bill Gurley said Friday on CNBC.
"I think the big story to watch in 2013 is the mobile payment space," he said on "Fast Money."
Gurley, who is general partner of venture capital firm Benchmark, likened competition in the segment to a clash of titans.
"I think there's going to be what I would call a 'battle royale.' This isn't a space that a startup is likely to do well in because it is so choreographed right now. Everyone is on high alert," he said. "The big companies are paying a ton of attention, and you've got PayPal out there. You've got Visa out there. You've got Square, which is pretty much funded like a mobile company. And you've got this Wal-Mart initiative, MCX."
Gurley said that large players, such as Amazon.com, are using price-discounting "as a way to win."
"It'll be a sport of kings," he added. "I wouldn't advise any startups to wade in."
As for the top social media stock to own in 2013, Gurley picked Facebook.
"This is a company you have to own if you're a large tech fund," he said. "It is a pre-eminent player in the space. It has a global network effect, and I do think it'll be a stock that we all talk about next year for sure."
Gurley cited Facebook's ubiquity in various companies' overall marketing strategies, calling it "an extremely important company."
Gurley also brushed off the Instagram fiasco, which followed the photography-based social media brand's change in its terms of service, which users opposed en masse.
(Watch: Instagram This: Backlash From Users)
"Instagram has reached levels of penetration that are just unbelievable, and I think the person who put this on their smartphone in Topeka yesterday is not thinking much about the terms of service," he said.
Facebook acquired Instagram in April for a reported $1 billion.