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No. 1017
September 21st, 2011

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Yelp vs Google in Congress

Most of you have probably heard that Google will go before the Senate Antitrust Committee in a couple hours.  One of the star “prosecution” witnesses is Yelp CEO Jeremy Stoppelman.

Regular readers know that in general, I’d like to see more oversight of Google’s activities by somebody & I’m hoping that these proceedings lead to exactly that.  For instance, despite being a $177 Billion company, Google has outsourced tech support for Places–a product with multibillion dollar annual revenue potential–to a small business owner in Olean, NY for most of its existence.  And if it continues to promote Local results to the degree it has for the past 24 months or so, its position in the marketplace demands better accountability–for both searchers AND small business owners.  And frankly, I think it makes economic sense for Google to do this as well, given the vast pools of money represented by the transition of local and SMB ad dollars from print to online media, and they’ve clearly put many more resources into support as they’ve fleshed out their Local product offerings for SMBs.

But, the fact is: Places is an awfully good product for consumers these days.  And if you’re a Places competitor, here is some advice:
1 Disallow Googlebot from crawling your site
2 Develop other ways of getting traffic
3 Build a better mousetrap 

No competitors should be surprised that Google wants them out of their Local results.  And, strange thing, Yelp is already doing #2 and #3 extremely well.  At the Kelsey Group show last December, Jeremy himself touted the fact that 30% of Yelp’s traffic came from their mobile app, a number that has no doubt increased as more and more people have bought iPhones and Droids in 2011.  Their review corpus is (I would say in-; others might say arguably) deeper and better quality than any other site on the web.  Yelp has integrated Facebook extremely well and I think have a sustainable business model moving forward, independent of Google.

Which is why I was disappointed to see the specific arguments against Google Jeremy used in his testimony.  Borrowing a page from Aaron Wall’s book, Jeremy nails Google’s business strategy:

It now hopes to be a destination site itself for one vertical market after another, including news, shopping, travel, and now, local business reviews.

but he immediately follows it up with an outright false and incendiary statement:

The experience in my industry is telling: Google forces review websites to provide their content for free to benefit Google’s own competing product […]

It is NOT a “false choice,” as he contends later in his testimony.  No one in Mountain View is forcing Yelp to do anything.  It’s been a looooonnng time since I’ve heard any webmaster complain that Googlebot was ignoring robots.txt commands.

He continues:

[In 2009] services like Yelp remained better positioned than Google itself to provide the sort of information that users were seeking about local businesses […]

Really?  If that’s the case, wouldn’t Yelp have had more than 2% market share in this well-cited and well-researched Comscore / 15 Miles study?

The worst kept secret in our industry is blatantly obvious in that Comscore graphic.  Google isn’t nearly the dominant force in Local Search that they are in Organic, and they remain extremely vulnerable to horizontal sites like Yelp, Citysearch, and others, vertical sites like TripAdvisor and Urbanspoon, yellow pages companies, daily deals sites, online newspapers, Facebook, independent app developers, and many, many, many others.  Let alone Bing’s +/- 30% market share from Organic search.

Yelp’s position in this hearing seems to be akin to a cable channel giving permission to–or even, asking–a network to show clips from one of its comedy shows, complaining loudly when the network refuses to syndicate the show in its entirety–and still not revoking permission to show those clips despite those very loud complaints.

Yelp and David Mihm, Inc. both want the same thing–more competition in Local Search.  But rather than focusing on “how Google Places is bad for Yelp and other Silicon Valley business models,” his argument would have been more successful–not to mention closer to the mental grasp of the average Senator–if he’d focused on the dangers for consumers and small business owners.  I thought Yelp had really matured as a company, but these arguments look mostly like sour grapes to me.

Update #1:
Just having read Greg’s SEL piece, I couldn’t agree more:

Unfortunately the fact that the subcommittee didn’t include any third party analysts, observers, advertisers or search marketing agencies to testify — in other words (relatively) disinterested parties — is a critical flaw in the design of these hearings. Accordingly they emerge as a kind of theater and not so much a fact-finding inquiry. 

Hey Senator Leahy, how about two roundtrip tickets to Dulles for the next one–one from Oakland and one from Buffalo?

Update #2:
Interesting stat from Google’s response:

In fact, most of the click traffic (roughly two-thirds of clicks) from our local search result pages goes directly to small business websites, and review sites make up the next largest percentage (about a quarter of clicks). Less than 10% of clicks from our local results page go to Google Place Pages. 

[emphasis mine]

  • Well David, I think you are right. Had Yelp brought to the forefront that G might be in a position to monopolize the market then they might have gotten more attention. It will be interesting to see just how much ruckus this will cause.

    I’ve always been curious to what percentage of people actually click thru to the Places Pages. I’m surprised it to be only 10%. I would have thought it to be at least 20%. That implies that when people search Google, they are looking for general information and not specifically reviews if that number is accurate.

    Let’s be honest… um… does anyone really think that Yelp doesn’t have the resources to edit their robots.txt file like you mention in the article. I think Yelp was angry that G apparently has stopped showing Yelp reviews in its corpus lately. Not as much traffic to Yelp anymore from this resource, right?

    It will be interesting how this will play out. It’s great because it will force EVERYONE to be better and more innovative.

    Thanks for your insights David!

    Eric “eRock” Christopher

  • Dave Oremland

    David: I love how you pretty quickly opened and immediately addressed how customer service was outsourced to Mike Blumenthal. Pretty true. In fact if you go into the Places Forum; a place where smb’s visit when all sorts of problems arise with their local records…Mike and several regular “outsiders” are the primary sources for solving problems. Google personnel skip most of the questions and issues.

    ……and that entire process is like something from an alien planet: Flabbergasting. Those Senators, and politicians should get their feet dirty and really take a look at that issue rather than grandstanding.

    With regard to the smb business websites I handle Google is a monopoly for that traffic. I’m not a big believer in the Comscore data and turn to other sources to get other “feels” and info about the market.

    Regardless of the above, add me to that list you started developing with regard to what we want to see for local: More competition in Local: Now the list has 3: Yelp, you and me!!! 😀

  • Terry Van Horne

    “Less than 10% of clicks from our local results page go to Google Place Pages.”
    Umm could that be because they are thin to almost useless content in many cases just an afterthought by the store. The reviews only coming from Google Plus peeps is about the dumbest thing they’ve done in a long time.

  • spot on – as usual, David – and yup, the outsourcing for Local Search to that firm in Olean, has been both noted and appreciated by us local search guys as well!

    Barry reported that Schmidt had done “pretty well” in his tesimony, and I’m still looking for a live link to same…but what I suspect is that there may never be anyone charged with the oversight of Google et al…..

    ‘sup to us, I’d guess….



  • Great analysis here! I think you are spot on with your criticism of both the way the proceedings went on, and of the arguments used by yelp. First off, there definitely should have been some third-party testimony. Otherwise you just end up with two companies saying, “Things would be easier if I didn’t have to compete.” Which is obvious. Not much of a fact-finding procedure if you ask me.

    The other thing of course was the argument that Google is just using yelp reviews to add to its own service. Obviously this is true, but that’s clearly not the whole story. If it was so harmful to yelp, they could just not allow it! Clearly it is benefiting them more than it is hurting them, or else they would just stop it.

  • Hi, I am the Marketing Manager for one of the biggest Locksmith companies in South Florida, found this blog through Outspoken Media. Wanted to reference an ongoing discussion about Google Places in the Linkedin Medeco Security Center group, here:
    As some of you may have heard the Locksmith industry is one of the most affected (recently covered in the NY Times) , if not the most affected, by Local Spam, resulting in Google restricting the Locksmith Industry, ironically there are countless locksmith impostors and spammers with approved Google Places pages. The ones who end up suffering are companies like ours who have a big overhead, employ a lot of people, pay for electricity bills, and so on, and of course, the consumers who gets scammed by these guys. What called my attention is the above assertion that Google Outsources the technical support for Places. Does Google has the obligation at this point to invest in manpower to solve problems like the ones of the Locksmith Industry?

  • Moises,

    I was being a bit tongue-in-cheek with my suggestion that Google has outsourced Places support to Mike. The truth is they have very little support (although it’s gotten better in recent months) for this product and Mike is their de facto customer service.

    Your question about whether Google has an obligation to invest in this is a good one, that our community has been asking for years, and that is still open.