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As the ubiquitous computing vision materializes, the number and diversity of digital elements in our environment increases. Computing capability comes in various forms and is embedded in different physical objects, ranging from miniature devices such as human implants and tiny sensor particles, to large constructions such as vehicles and entire buildings. The number of possible interactions among such elements, some of which may be invisible or offer similar functionality, is growing fast so that it becomes increasingly hard to combine or select between them. Mechanisms are thus required for intelligent matchmaking that will achieve controlled system behavior, yet without requiring the user to continuously input desirable options in an explicit manner. In this paper we argue that information about the co-location relationship of computing elements is quite valuable in this respect and can be exploited to guide automated service selection with minimal or no user involvement. We also discuss the implementation of such mechanism that is part of our runtime system for smart objects.