The accusations, and now lawsuit, that Yelp is extorting its customers is serious - not only for the customers of course, many of which are small businesses that depend on advertising - but also for the geo-location/review business model.
Yelp’s CEO Jeremy Stoppelman has vigorously denied the accusations on his blog. “There has been a long history of people accusing Yelp of monkeying around with reviews in exchange for money,” he wrote. “The allegations are disappointing, not only because they are false, but because they ignore empirical evidence in favor of conspiracy theories.”
Step By StepThe question is, why do these accusations keep resurfacing?
Stoppelman has some ideas, which he detailed step-by-step on his blog.
Step 1. Business owner gets a sales call from Yelp that explains an advertising product which seems nuanced; hears stuff like “Favorite review at top” and “Enhance your presence”. Business owner eventually decides, “Thanks, but no thanks on the ads, Yelp.”
Step 2. Business owner newly-exposed to Yelp decides it’s interesting and aggressively solicits all their family and friends to write reviews.
Step 3. We’ve already cautioned against this practice and this is why: a few days later, our automated filter suppresses the suspicious-looking reviews.
Step 4. Business assumes algorithmic process in Step 3 is actually a Yelp employee manually punishing the business for declining to advertise in Step 1.
Optional Step 5. Now-angry business finds the Orly Taitz of internet lawyers who may or may not have read about our recent funding round.
Stoppelman concludes by saying "we may be weird but we have nothing to hide.”
To a point that is probably so, the Wall Street Journal blog writes. But for the sake of the company, Stoppelman needs to re-think its communication policies and processes. “These accusations have been going on for more than a year, causing the company to spend precious time and money defending itself against bad publicity and now a class-action suit. Before Yelp gets dragged into another lawsuit, it might be in Stoppelman’s best interest to find a way for his sales team to more clearly express to business owners how its filtering process works.”
Geo Location is Changing Search
Yelp has more than just its own reputation at stake with this suit. The company has become the poster child for geo location-based search and reputation or review-based advertising - a trend that is reshaping how many people view these two concepts, according to Internet2Go.
“It’s very tempting to dismiss "geo-social games" such as Foursquare, Gowalla and MyTown as fads," Internet2Go said. "Yet doing so would diminish how these apps alter the culture of local mobile search and even location-based "advertising" in potentially significant ways.”