Yelp: The Firm Who Cried “Monopoly”
The website known for popularizing amateur food reviews has been a vocal critic of Google’s business practices
On Tuesday, Yelp announced that it filed a formal antitrust complaint against Google with the EU. In recent years, Yelp, the website known for its crowd-sourced business ratings, has joined the chorus of ad-driven businesses decrying Google’s business practices. Through the press and lobbying, Yelp has pushed lawmakers and regulators to take action against Google.
Yelp’s working of the press was on full display this past Sunday, when CBS’s 60 Minutes ran a story on Google’s market power. The report contrasts the EU’s aggressive enforcement actions against Google with American regulator’s findings that the firm’s search or advertising practices do not merit intervention. Steve Kroft, who reported the story, features an interview with Yelp co-founder and CEO Jeremy Stoppelman.
In a clumsy demonstration any viewer can recreate in his web browser, Stoppelman shows Kroft the behavior of Google’s search engine that is the subject of Yelp’s complaint to the EU. In particular, Google searches for businesses and restaurants display most prominently a Google Maps view indicating nearby locations that satisfy the query, say “thai food.” Below the map graphic is a list of those same businesses that includes a 5-star rating score sourced from Google users that have written reviews, much like how Yelp creates business ratings from its user reviews.
Stoppelman, as well as Yelp’s vice president of public policy Luther Lowe, believes Google’s prioritization of its Maps results over Yelp’s business ratings webpages is an abuse of its market position in search. Writing in the Wall Street Journal, Lowe argues that Google has created a “walled garden” that hurts competitors. By keeping Google search users within Google’s web services rather than serving results that drive traffic to third-parties like Yelp, Google harms Yelp by denying it the traffic needed to generate ad revenue. A 2017 financial disclosure reported that most of Yelp’s web traffic is generated by search results from Google, Bing, and the like.
Yelp never explicitly states that its webpages should be given priority in Google search, yet the implication is clear that Yelp wishes to regain top search result status for business-related Google searches, whether by a future update to Google’s page-ranking algorithm or by government fiat. With no control over the former, Yelp has opted to devote its time and energy pursuing the latter.
Yelp has had no victories against Google in the U.S. to date — a multi-year FTC investigation ended with no complaints being filed against the company. Yet Yelp has renewed optimism following a recent $2.7 billion fine issued against Google by the EU and growing interest in tech regulation in the U.S. When leveling the fine against Google in 2017, the EU antitrust regulator sided with arguments similar to Yelp’s made by other Google competitors, determining that Google had illegally prioritized its own comparison shopping service over similar competing services.
The EU’s example raises serious concerns that should be heeded by those who wish U.S. regulators would give Yelp a fair hearing. The EU has rewarded firms that have spent tireless energy lobbying for regulatory action against competitors rather than improving their own products. The investigation that led to the large Google fine in 2017 was kicked off by a complaint from European online search firm Foundem, written all the way back in 2009. In the intervening years, Foundem “temporarily” disabled its search services until “the level playing field required for competition and innovation to thrive has been restored.” Despite Google having taken steps to fall into compliance with the EU’s order, Foundem has not yet continued service but instead petitioned the EU competition chief in Feb. 2018 to take further steps to make Google comply with its order.
This shows that competitors will not settle for anything less than draconian measures against Google that either require the tech giant to prop up its competitors or discontinue key components of its web services. In order to ensure that Google gives competing services a “fair shake” in its search results, one or some combination of these rules would need to be enforced:
- Algorithmic transparency, so that the neutrality of Google’s page-ranking algorithm can be monitored by competitors and regulators. Alleged “search bias” was at the heart of both the FTC’s closed investigation and the EU’s investigation that led to the momentous fine.
- Interoperability mandate. In the Wall Street Journal article, Lowe suggest that under such a mandate, “Google could power its local searches with services like TripAdvisor, ZocDoc and Yelp.”
Yelp striking a deal with Google to serve online business ratings and reviews to its search results would be very lucrative, as the Yahoo-Bing search deal showed. But it’s unreasonable to expect that forcing Google to shut down its own web services and contract with a competitor is pro-competition (as opposed to pro-competitor).
Further, the full extent to which Google must make its search service interoperable will be almost impossible to parse. Besides crowd-sourced business ratings, would Google need to contract with Expedia to serve travel search results, with MapQuest to serve turn-by-turn navigation searches, or with eBay or Amazon to serve e-commerce results? Requiring Google to outsource its search services to dozens of search boutiques may sound hyperbolic, but the 19 signers of Feb. 2018 letter asking for greater EU enforcement against Google includes firms or trade groups representing firms in travel search, digital mapping, comparison shopping, and news publishing.
While Yelp’s efforts to lobby for similar moves in the U.S. are an understandable move motivated by self-preservation, it’s a great shame that the American press continues to cast Yelp as a sympathetic underdog fighting for the American public rather than a self-serving, rent-seeking business. Its top employees continue to call for regulation despite the fact that anyone can find Yelp’s ratings on the first page of relevant Google searches, at the top of Google’s results by appending “yelp” to any search, or by directly using the search tool featured at the top of Yelp.com.
The idea that Yelp could ease its dependence on Google’s page rankings by focusing on improving its service and driving growth through direct web traffic and its mobile app is not beyond the pale. Consider that Amazon has made significant gains on Google in e-commerce search — studies from last year estimate that about half of online product searches now begin on Amazon. Google’s dominant share in search overall need not be destiny for search in travel or restaurant reviews, no matter what Google’s struggling competitors tell regulators.
