5 Downsides to a Google-Yelp Union

The search gorilla may be ready to slap $500 million on the table, but that doesn't mean it should

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Google is considering gulping local-review site Yelp to the tune of $500 million. Yelp, for the uninitiated, is a bubbling community of users who have scribbled millions of reviews of restaurants, hotels, and hotspots in cities around the country. The upside of the union is that Google could marry Yelp's local lore with Google Maps, location-specific advertising and more. Om Malik, founder of influential site GigaOm, thinks it's a "good short term move"--a sentiment other tech-bloggers share. But the prospect does raise a few concerns:

  • Yelpers Will Be Annoyed, writes Greg Sterling, an expert on local search. He is generally excited by the prospect of a union, which he says would be an "earthquake" in local media. But he notes, "Yelpers will initially be quite upset about their site and community being absorbed by Google; however they'll get over it just like YouTube users did. But in the process the Yelp brand identity will lose some of its edge, which is what will partly create the opening for others."
  • Would Boost Yelp's Exploitative Tendencies, says Ryan Tate in Valleywag. "Yelp isn't just any online content startup. It wields disproportionate power over local merchants, from restaurants to auto body shops, and said merchants have repeatedly told tales of Yelp offering to let them re-arrange reviews if they took out ads -- and of disappearing positive reviews in retaliation when they complained about the ethics of the situation ... Google has already seen its reputation as the "Don't Be Evil" internet company erode significantly, most recently after CEO Eric Schmidt said people should consider not having secrets, a story that spread widely online and in the news media. If it's going to seduce Yelp, Google should make sure its remaining friends know the company plans to reform its new toy rather than join its caddish pursuits."
  • $500 Million Would Be Overpaying, writes Alex Wilhelm at The Next Web. Wilhelm goes through an analysis of the figures, and compares it to industry standards. Based on Yelp's current profits, Wilhelm concludes, "If indeed Google pays this much, it seems, by the normal accepted metrics to be far too much. About 100% too much. We'll see."
  • A Step Closer to Google Dominance? A user quoted by Marshall Kirkpatrick in an excellent survey at ReadWriteWeb channels a common theme: "I love Google, but they need competition. Buying Yelp moves Google one step closer to becoming yet-another-Microsoft." Another said, "Yelp is a community that doesn't need Google as their overlord."
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