Google Buying Zagat Makes Instant Sense

With a renewed focus on locals, Google is getting into the content business

When news broke that Google is buying the Zagat restaurant review empire, everybody thought it was a joke. It's easy to see why one might laugh at the idea of Google, the company that famously favors algorithmic knowledge over editorial judgement, is buying a business built on editorial judgement. But the Zagat purchase, along with a pronounced mission to build out their local listings offerings, points to the idea that Google wants to be a content company. Buying Zagat is a serious move in the right direction.

Google has tried this before. In 2009, the search giant offered Yelp over half a billion dollars to buy their crowdsourced local business reviews site. It's not entirely clear whether Yelp walked away for the deal or if Google had second thoughts, but the deal fell through, leaving Google two years to watch the local space expand. Expand it did, and Google followed, adding new features like their Groupon clone Google Offers and location-based Yelp equivalent Google Places. But as we recently pointed out, Google's crowdsourcing model has been riddled with problems. Local businesses were flagging their competitors's listings, saying that the business were closed or posting fake reviews. As our own Rebecca Greenfield said, "It's not that crowdsourcing never works, but for companies that have such large user bases things can get messy."

Enter Zagat. The 32-year-old listings company sort of invented crowdsourcing local restaurants. Rather than open the floodgates to full participation of customers--and potentially letting in abuse--Zagat surveys the crowd and aggregates their opinions. The reviews are inevitably statistical, but the human touch is not lost. In Zagat's own words, it's a "business based on a simple premise--that the shared opinions of thousands of avid consumers with real experiences are inherently more accurate than the opinions of just one or two critics." In a way, the basic idea is not dissimilar to the principle behind Google's original PageRank algorithm.

So why didn't Google just write a new algorithm to aggregate opinions from existing user sites? Even though they've been doing this kind of thing with search for ages, recent lessons show that they need more control over the content to ensure future growth. After all, this is the same Google that tried and failed (miserably) to digitize all of the world's books and make them searchable. Publishers loathed the Google Books project so successfully they squeezed $125 million out of the company in a copyright lawsuit. But it was lessons like this that likely led the search giant to the realization that they if they really wanted to control how people found information, at some point they would need to own the information itself.

Now armed with the prestige of the Zagat brand, Google is poised to crush Yelp. You might call it payback for the sour deal a couple of years ago, but we'd call it progress. Zagat brings with it to Google over three decades of experience parsing through local reviews as well as their archive of content that includes not only restaurant reviews but also entertainment, travel and wine content. As Craig Newmark likes to say, "trust is the new black" as far as the Internet goes. When it's time for dinner, whom do you trust more? The established company with a tried, tested and celebrated method for picking winners? Or the Yelper down the street with a crush on the waitress?