Yelp Inc. is an American company that develops the Yelp.com website and the Yelp
mobile app
A mobile application or app is a computer program or software application designed to run on a mobile device such as a phone, tablet, or watch. Mobile applications often stand in contrast to desktop applications which are designed to run on d ...
, which publish
crowd-sourced
Crowdsourcing involves a large group of dispersed participants contributing or producing goods or services—including ideas, votes, micro-tasks, and finances—for payment or as volunteers. Contemporary crowdsourcing often involves digita ...
reviews about businesses. It also operates Yelp Guest Manager, a
table reservation
A table reservation is an arrangement made in advance to have a table available at a restaurant. While most restaurants in the vast majority of the world do not require a reservation, and some do not have a policy or simply any channel for making ...
service. It is headquartered in
San Francisco, California
San Francisco (; Spanish for " Saint Francis"), officially the City and County of San Francisco, is the commercial, financial, and cultural center of Northern California. The city proper is the fourth most populous in California and 17th ...
.
Yelp was founded in 2004 by former
PayPal
PayPal Holdings, Inc. is an American multinational financial technology company operating an online payments system in the majority of countries that support online money transfers, and serves as an electronic alternative to traditional paper ...
employees
Russel Simmons
Russel Simmons is an American businessman. He co-founded Yelp, Inc. with Jeremy Stoppelman and served as CTO from July 2004 until he left in June 2010. Prior to co-founding Yelp, Simmons was a co-founder of PayPal, where he was a Lead Software A ...
and
Jeremy Stoppelman
Jeremy Stoppelman (born November 10, 1977) is an American business executive. He is the CEO of Yelp, which he co-founded in 2004. Stoppelman obtained a bachelor's degree in computer engineering from the University of Illinois at Urbana–Champai ...
. Yelp grew in usage and raised several rounds of funding in the following years. By 2010, it had $30 million in revenue, and the website had published about 4.5 million crowd-sourced reviews. From 2009 to 2012, Yelp expanded throughout
Europe
Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a Continent#Subcontinents, subcontinent of Eurasia ...
and
Asia
Asia (, ) is one of the world's most notable geographical regions, which is either considered a continent in its own right or a subcontinent of Eurasia, which shares the continental landmass of Afro-Eurasia with Africa. Asia covers an area ...
. In 2009, it entered unsuccessful negotiations to be acquired by
Google
Google LLC () is an American multinational technology company focusing on search engine technology, online advertising, cloud computing, computer software, quantum computing, e-commerce, artificial intelligence, and consumer electronics. ...
. Yelp became a
public company
A public company is a company whose ownership is organized via shares of stock which are intended to be freely traded on a stock exchange or in over-the-counter markets. A public (publicly traded) company can be listed on a stock exchange (l ...
via an
initial public offering
An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...
in March 2012 and became profitable for the first time two years later.
As of December 31, 2021, approximately 244.4 million reviews were available on its business listing pages. In 2021, the company had 46 million unique visitors to its desktop webpages and 56.7 million unique visitors to its mobile sites. Over 50% of the company's audience has an annual household income of more than $100,000.
The company has been accused of using unfair practices to raise revenue from the businesses that are reviewed on its site e.g., by presenting more negative review information for companies that do not purchase its advertising services or by prominently featuring advertisements of the competitors of such non-paying companies or conversely by excluding negative reviews from companies' overall rating on the basis that the reviews "are not currently recommended".
There have also been complaints of aggressive and misleading tactics by some of its advertising sales representatives. The company's review system's reliability has also been affected by the submission of fake reviews by external users, such as false positive reviews submitted by a company to promote its own business or false negative reviews submitted about competing businesses a practice sometimes known as "
astroturfing
Astroturfing is the practice of masking the sponsors of a message or organization (e.g., political, advertising, religious or public relations) to make it appear as though it originates from and is supported by grassroots participants. It is a p ...
", which the company has tried to combat in various ways.
Company history (2004–present)
Origins (2004–2009)
![Jeremy Stoppelman LeWeb conference](https://upload.wikimedia.org/wikipedia/commons/5/5d/Jeremy_Stoppelman_LeWeb_conference.jpg)
Two former
PayPal
PayPal Holdings, Inc. is an American multinational financial technology company operating an online payments system in the majority of countries that support online money transfers, and serves as an electronic alternative to traditional paper ...
employees,
Jeremy Stoppelman
Jeremy Stoppelman (born November 10, 1977) is an American business executive. He is the CEO of Yelp, which he co-founded in 2004. Stoppelman obtained a bachelor's degree in computer engineering from the University of Illinois at Urbana–Champai ...
and
Russel Simmons
Russel Simmons is an American businessman. He co-founded Yelp, Inc. with Jeremy Stoppelman and served as CTO from July 2004 until he left in June 2010. Prior to co-founding Yelp, Simmons was a co-founder of PayPal, where he was a Lead Software A ...
, founded Yelp at a
business incubator
Business incubator is an organization that helps startup companies and individual entrepreneurs to develop their businesses by providing a fullscale range of services starting with management training and office space and ending with venture ca ...
, MRL Ventures, in 2004.
[ Stoppelman and Simmons conceived the initial idea for Yelp as an email-based referral network, after Stoppelman caught the flu] and had a difficult time finding an online recommendation for a local doctor. Max Levchin
Maksymilian Rafailovych "Max" Levchin ( uk, Максиміліан Рафаїлович Левчин; born July 11, 1975) is a Ukrainian-American software engineer and businessman. In 1998, he co-founded the company that eventually became PayP ...
, the co-founders' former colleague as founding chief technology officer of PayPal and founder of MRL Ventures, provided $1 million in Angel financing
An angel investor (also known as a business angel, informal investor, angel funder, private investor, or seed investor) is an individual who provides capital for a business or businesses Startup company, start-up, usually in exchange for convertibl ...
. MRL co-founder David Galbraith, who instigated the local services project based on user reviews, came up with the name "Yelp". Stoppelman explained that they decided on "Yelp" for the company's name because "it was short, memorable, easy to spell, and was familiar with 'the help' and 'yellow pages
The yellow pages are telephone directories of businesses, organized by category rather than alphabetically by business name, in which advertising is sold. The directories were originally printed on yellow paper, as opposed to white pages for ...
'".
According to ''Fortune
Fortune may refer to:
General
* Fortuna or Fortune, the Roman goddess of luck
* Luck
* Wealth
* Fortune, a prediction made in fortune-telling
* Fortune, in a fortune cookie
Arts and entertainment Film and television
* ''The Fortune'' (1931 film) ...
'', Yelp's initial email-based system was "convoluted".[ The idea was rejected by investors and did not attract users beyond the cofounders' friends and family.] Usage data showed that users were not answering requests for referrals, but were using the "Real Reviews" feature, which allowed them to write reviews unsolicited.[ According to '']The San Francisco Chronicle
The ''San Francisco Chronicle'' is a newspaper serving primarily the San Francisco Bay Area of Northern California. It was founded in 1865 as ''The Daily Dramatic Chronicle'' by teenage brothers Charles de Young and Michael H. de Young. The pa ...
'', "the site's popularity soared" after it was re-designed in late 2005. Yelp raised $5 million in funding in 2005 from Bessemer Venture Partners
Bessemer Venture Partners (Bessemer) is an American venture capital firm. The firm has over $19 billion under management and invests globally, with offices in San Francisco, Redwood City, New York City, Boston, Israel, India, and London.
Bessemer ...
and $10 million in November 2006 from Benchmark Capital
Benchmark is a venture capital firm based in San Francisco that provides seed money to startups.
History
The firm's most successful investment was a 1997 investment of $6.7 million in eBay for 22.1% of the company. In 2011, it invested $12 mill ...
.[ The number of reviewers on the site grew from 12,000 in 2005, to 100,000 in 2006.] By the summer of 2006, the site had one million monthly visitors. It raised $15 million in funding from DAG Ventures
DAG Ventures is an American venture capital firm based in Palo Alto, California. DAG Ventures works with startups in providing early stage and growth stage funding. Since its founding in 2004, by Tom Goodrich and John Cadeddu, the firm has backed ...
in February 2008. In 2010, Elevation Partners
Elevation Partners was an American private equity firm that invested in intellectual property, technology and media companies. The firm had $1.9 billion of assets under management. The firm was founded in 2004 and was headquartered in New York C ...
invested $100 million; $75 million was spent on purchasing equity from employees and investors, while $25 million was invested in sales staff and expansion. Yelp grew from 6 million monthly visitors in 2007 to 16.5 million in 2008 and from 12 to 24 cities during the same time period. By 2009, the site had 4.5 million reviews.[ By 2010, Yelp's revenues were estimated to be $30 million and it employed 300 people.]
Private company (2009–2012)
Yelp introduced a site for the United Kingdom in January 2009 and one for Canada that August. The first non-English Yelp site was introduced in France in 2010; users had the option to read and write content in French or English. From 2010 to 2011, Yelp launched several more sites, in Austria, Germany, Spain, and the Netherlands. International website traffic doubled during the same time period. An Australian website went live in November 2011. It was supported through a partnership with Telstra
Telstra Group Limited is an Australian telecommunications company that builds and operates telecommunications networks and markets voice, mobile, internet access, pay television and other products and services. It is a member of the S&P/ASX 20 ...
, which provided one million initial business listings, and was initially glitchy. Yelp had a presence in 20 countries by the end of 2012, including Turkey and Denmark. Yelp's first site in Asia was introduced in September 2012 in Singapore,[ which was followed by Japan in 2014.
In December 2009, ]Google
Google LLC () is an American multinational technology company focusing on search engine technology, online advertising, cloud computing, computer software, quantum computing, e-commerce, artificial intelligence, and consumer electronics. ...
entered into negotiations with Yelp to acquire the company, but the two parties failed to reach an agreement. According to ''The New York Times
''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...
'', Google offered about $500 million, but the deal fell through after Yahoo
Yahoo! (, styled yahoo''!'' in its logo) is an American web services provider. It is headquartered in Sunnyvale, California and operated by the namesake company Yahoo! Inc. (2017–present), Yahoo Inc., which is 90% owned by investment funds ma ...
offered $1 billion. TechCrunch
TechCrunch is an American online newspaper focusing on high tech and startup companies. It was founded in June 2005 by Archimedes Ventures, led by partners Michael Arrington and Keith Teare.
In 2010, AOL acquired the company for approximately ...
reported that Google refused to match Yahoo's offer. Both offers were later abandoned following a disagreement between Yelp's management and board of directors about the offers. In June 2015, Yelp published a study alleging Google was altering search results to benefit its own online services.
Yelp began a service called Yelp Deals in April 2011, but by August it cut back on Deals due to increased competition and market saturation. That September, the Federal Trade Commission
The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction ov ...
investigated Yelp's allegations that Google was using Yelp web content without authorization and that Google's search algorithm
In computer science, a search algorithm is an algorithm designed to solve a search problem. Search algorithms work to retrieve information stored within particular data structure, or calculated in the search space of a problem domain, with eith ...
s favored Google Places
Google Maps is a web mapping platform and consumer application offered by Google. It offers satellite imagery, aerial photography, street maps, 360° interactive panoramic views of streets ( Street View), real-time traffic conditions, and rou ...
over similar services provided by Yelp. In a January 2014 agreement, Google was not subject to anti-trust litigation from the FTC, but did have to allow services like Yelp the ability to opt out of having their data scraped and used on Google's websites.
Public entity (2012–present)
Having filed for an initial public offering
An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...
(IPO) with the Securities Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
in November 2011, Yelp's stock began public trading on the New York Stock Exchange
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its listed c ...
on March 2, 2012. In 2012, Yelp acquired its largest European rival, Qype
Qype was a Hamburg-based web 2.0 company centred on social networking and local reviews. They operated websites in Germany, the United Kingdom, France, Switzerland, Austria, Ireland, Poland, Spain, Italy and Brazil, and had approximately 22 mi ...
, for $50 million.[ The following year, CEO ]Jeremy Stoppelman
Jeremy Stoppelman (born November 10, 1977) is an American business executive. He is the CEO of Yelp, which he co-founded in 2004. Stoppelman obtained a bachelor's degree in computer engineering from the University of Illinois at Urbana–Champai ...
reduced his salary to $1. Yelp acquired start-up online reservation company SeatMe for $12.7 million in cash and stock in 2013. Yelp's second quarter 2013 revenue of $55 million "exceeded expectations", but the company was not yet profitable.
In 2012/13, Yelp moved into its new corporate headquarters, occupying about 150,000 square feet on 12 floors of 140 New Montgomery
140 New Montgomery Street, originally known as The Pacific Telephone & Telegraph Company Building, and, after 1984, as The Pacific Bell Building or The PacBell Building, in San Francisco's South of Market district, is an Art Deco mixed-use office ...
(the former PacBell building) in San Francisco.
The company was profitable for the first time in the second quarter of 2014, as a result of increasing ad spending by business owners and possibly from changes in Google's local search algorithm. It is dubbed as Google Pigeon
Google Pigeon is the code name given to one of Google's local search algorithm updates. This update was released on July 24, 2014. The update is aimed to increase the ranking of local listing in a search.
The changes will also affect the search ...
, which helped authoritative local directory sites like Yelp and TripAdvisor, in getting more visibility. Over the course of the year, Yelp websites were launched in Mexico, Japan, and Argentina. Also in 2014, Yelp expanded in Europe through the acquisitions of German-based restaurant review site
A review site is a website on which reviews can be posted about people, businesses, products, or services. These sites may use Web 2.0 techniques to gather reviews from site users or may employ professional writers to author reviews on the topic ...
Restaurant-Kritik and French-based CityVox.
In early February 2015, Yelp announced it was buying Eat24, an online food-ordering service, for $134 million. Then in August 2017, Yelp sold Eat24 to Grubhub
Grubhub Inc. is an American online and mobile prepared food ordering and delivery platform. The company is based in Chicago, Illinois.
Founded in 2004, it is a subsidiary of the Dutch company Just Eat Takeaway since 2021. Grubhub has been criti ...
for $287.5 million. The acquisition resulted in a partnership to integrate Grubhub delivery into the Yelp profiles of restaurants.
In late 2015, a "Public Services & Government" section was introduced to Yelp and the General Services Administration
The General Services Administration (GSA) is an independent agency of the United States government established in 1949 to help manage and support the basic functioning of federal agencies. GSA supplies products and communications for U.S. gover ...
began encouraging government agencies to create and monitor official government pages. For example, the Transportation Security Administration
The Transportation Security Administration (TSA) is an agency of the United States Department of Homeland Security (DHS) that has authority over the security of transportation systems within, and connecting to the United States. It was created ...
created official TSA Yelp pages. Later that year Yelp began experimenting in San Francisco with consumer alerts that were added to pages about restaurants with poor hygiene scores in government inspections. Research conducted by the Boston Children's Hospital
Boston Children's Hospital formerly known as Children's Hospital Boston until 2012 is a nationally ranked, freestanding acute care children's hospital located in Boston, Massachusetts, adjacent both to its teaching affiliate, Harvard Medical Scho ...
found that Yelp reviews with keywords associated with food poisoning correlates strongly with poor hygiene at the restaurant. Researchers at Columbia University
Columbia University (also known as Columbia, and officially as Columbia University in the City of New York) is a private research university in New York City. Established in 1754 as King's College on the grounds of Trinity Church in Manhatt ...
used data from Yelp to identify three previously unreported restaurant-related food poisoning outbreaks.
On November 2, 2016, concurrent with its earnings report for Q3 2016, Yelp announced it would drastically scale back its operations outside North America and halt international expansion. This resulted in the termination of essentially all international employees across Yelp's 30+ international markets from the sales, marketing, public relations, business outreach, and government relations departments. Overseas employees now primarily consist of engineering and product management staff. These layoffs affected only 175 individuals, or 4% of its total workforce.
In March 2017, Yelp acquired restaurant reservation app Nowait for $40 million. In April 2017, Yelp acquired Wi-Fi
Wi-Fi () is a family of wireless network protocols, based on the IEEE 802.11 family of standards, which are commonly used for local area networking of devices and Internet access, allowing nearby digital devices to exchange data by radio wave ...
marketing company Turnstyle Analytics for $20 million.
In early 2020, Yelp listed space at 55 Hawthorne Street, San Francisco, for 235 employees as available for sublease. Business closures and stay-at-home orders during the COVID-19 pandemic in the United States
The COVID-19 pandemic in the United States is a part of the COVID-19 pandemic, worldwide pandemic of COVID-19, coronavirus disease 2019 (COVID-19) caused by SARS-CoV-2, severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). In the Uni ...
caused a massive decline in searches on Yelp (down 64%-83% from March to April, depending on category) and company revenues. On April 9, the company announced it would lay off 1,000 employees, furlough about 1,100 with benefits, reduce hours for others, cut executive pay by 20-30%, and stop paying the CEO for the rest of 2020.
In September 2021, Yelp announced that it was relocating its corporate headquarters to a smaller space at 350 Mission Street to be subleased from Salesforce
Salesforce, Inc. is an American cloud-based software company headquartered in San Francisco, California. It provides customer relationship management (CRM) software and applications focused on sales, customer service, marketing automation, a ...
.
In June 2022, Yelp announced that it would downsize its office in Phoenix and close three of its main offices in Chicago, New York, and Washington DC and switch to remote work models in these locations.
Features
Yelp's website, Yelp.com, is a crowd-sourced local business review and social networking site.[ The site has pages devoted to individual locations, such as restaurants or schools, where Yelp users can submit a review of their products or services] using a one to five star rating scale :''Concerning rating scales as systems of educational marks, see articles about education in different countries (named "Education in ..."), for example, Education in Ukraine.''
:''Concerning rating scales used in the practice of medicine, see arti ...
. Businesses can also update contact information, hours, and other basic listing information or add special deals.[ In addition to writing reviews, users can react to reviews, plan events, or discuss their personal lives.][
78% of businesses listed on the site had a rating of three stars or better,] but some negative reviews were very personal or extreme. Some of the reviews are written in an entertaining or creative manner. As of 2014, users could give a "thumbs-up" to reviews they liked, which caused these reviews to be featured more prominently in the system.[ As of 2008, each day a "Review of the Day" was determined based on a vote by users.]
72% of Yelp searches are done from a mobile device.[ The Yelp iPhone ]mobile app
A mobile application or app is a computer program or software application designed to run on a mobile device such as a phone, tablet, or watch. Mobile applications often stand in contrast to desktop applications which are designed to run on d ...
was introduced in December 2008. In August 2009, Yelp released an update to the iPhone app with a hidden Easter Egg
Easter eggs, also called Paschal eggs, are eggs that are decorated for the Christian feast of Easter, which celebrates the resurrection of Jesus. As such, Easter eggs are common during the season of Eastertide (Easter season). The oldest tr ...
augmented reality feature called Monocle, which allowed users looking through their iPhone camera to see Yelp data on businesses seen through the camera. Check-in features were added in 2010.
Yelp users can make restaurant reservations in Yelp through Yelp Reservations, a feature originally added in June 2010; in 2021 the service was consolidated with others into "Yelp Guest Manager". Yelp's reservation features have been done through SeatMe
Yelp Inc. is an American company that develops the Yelp.com website and the Yelp mobile app, which publish crowd-sourced reviews about businesses. It also operates Yelp Guest Manager, a table reservation service. It is headquartered in San Fra ...
, which was acquired by Yelp in 2013. Prior to that, Yelp had offered reservation services through OpenTable
OpenTable is an online restaurant-reservation service company founded by Sid Gorham, Eric Moe and Chuck Templeton on 2 July 1998 and is based in San Francisco, California.
In 1998, operations began with a limited selection of restaurants in S ...
. In 2013, features to have food ordered and delivered were added to Yelp as well as the ability to view hygiene inspection scores and make appointments at spas.[ Yelp's content was integrated into ]Apple Inc.
Apple Inc. is an American multinational technology company headquartered in Cupertino, California, United States. Apple is the largest technology company by revenue (totaling in 2021) and, as of June 2022, is the world's biggest company ...
's Siri
Siri ( ) is a virtual assistant that is part of Apple Inc.'s iOS, iPadOS, watchOS, macOS, tvOS, and audioOS operating systems. It uses voice queries, gesture based control, focus-tracking and a natural-language user interface to answer questio ...
"virtual assistant
An intelligent virtual assistant (IVA) or intelligent personal assistant (IPA) is a software agent that can perform tasks or services for an individual based on commands or questions. The term "chatbot" is sometimes used to refer to virtual ...
" and the mapping and directions app of Apple's September 2012 release of the iOS 6
iOS 6 is the sixth major release of the iOS mobile operating system developed by Apple Inc, being the successor to iOS 5. It was announced at the company's Worldwide Developers Conference on June 11, 2012, and was released on September 19, 201 ...
computer operating system.
In March 2014, Yelp added features for ordering and scheduling manicures, flower deliveries, golf games, and legal consultations, among other things. In October 2014, the company, working in collaboration with hotel search site Hipmunk, added features to book hotels through Yelp.
Yelp started a 7–10% cash back program at some US restaurants in 2016 through partnership with Empyr, a company that links credit card purchases to online advertising
Online advertising, also known as online marketing, Internet advertising, digital advertising or web advertising, is a form of marketing and advertising which uses the Internet to promote products and services to audiences and platform users. ...
.
On February 14, 2017, Yelp launched Yelp Questions and Answers, a feature for users to ask venue-specific questions about businesses.
In June 2020, Yelp launched a COVID-19 section which enables businesses to update their health and safety measures as well as their service offering changes. Starting January 2021, users can provide detailed feedback regarding what health and safety measures the business has implemented through editing in the COVID-19 section on Yelp business pages.
Features for businesses
Yelp added the ability for business owners to respond to reviews in 2008. Businesses can respond privately by messaging the reviewer or publicly on their profile page. In some cases, Yelp users that had a bad experience have updated their reviews more favorably due to the businesses' efforts to resolve their complaints. In some other cases, disputes between reviewers and business owners have led to harassment and physical altercations. The system has led to criticisms that business owners can bribe reviewers with free food or discounts to increase their rating, though Yelp users say this rarely occurs.[ A business owner can "claim" a profile, which allows them to respond to reviews and see traffic reports.] Businesses can also offer discounts to Yelp users that visit often using a Yelp "check in" feature.[ In 2014, Yelp released an app for business owners to respond to reviews and manage their profiles from a mobile device. Business owners can also flag a review to be removed, if the review violates Yelp's content guidelines.
Yelp's revenues primarily come from selling ads and sponsored listings to small businesses.] Advertisers can pay to have their listing appear at the top of search results, or feature ads on the pages of their competitors. In 2016, advertising revenue grew at a rate of 30% year over year. Yelp will only allow businesses with at least a three-star rating to sign up for advertising. Originally a sponsored "favorite review" could place a positive review above negative ones, but Yelp stopped offering this option in 2010 in an effort to deter the valid criticism that advertisers were able to obtain a more positive review appearance in exchange for pay.
On June 5, 2020, Yelp launched a tool to allow businesses on the platform to identify themselves as black-owned, allowing customers to search for black-owned businesses they want to support. There were more than 2.5 million searches for black-owned businesses on Yelp from May 25 to July 10. Searches for black-owned businesses were up 2,400% in 2020. In August 2021 Yelp added a feature to let users filter businesses based on their COVID precautions.
Relationship with businesses
A Harvard Business School
Harvard Business School (HBS) is the graduate business school of Harvard University, a private research university in Boston, Massachusetts. It is consistently ranked among the top business schools in the world and offers a large full-time MBA p ...
study published in 2011 found that each "star" in a Yelp rating affected the business owner's sales by 5–9%. A 2012 study by two University of California, Berkeley
The University of California, Berkeley (UC Berkeley, Berkeley, Cal, or California) is a public land-grant research university in Berkeley, California. Established in 1868 as the University of California, it is the state's first land-grant u ...
economists found that an increase from 3.5 to 4 stars on Yelp resulted in a 19% increase in the chances of the restaurant being booked during peak hours. A 2014 survey of 300 small business owners done by Yodle
Web.com Group Inc. was an American company headquartered in Jacksonville, Florida that provides domain name registration and web development services. Established in 1999 by Darin Brannan, the company was known as Website Pros Inc. until early 2 ...
found that 78% were concerned about negative reviews. Also, 43% of respondents said they felt online reviews were unfair, because there is no verification that the review is written by a legitimate customer.[
]
Controversy and litigation
Yelp has a complicated relationship with small businesses. Criticism of Yelp continues to focus on the legitimacy of reviews, public statements of Yelp manipulating and blocking reviews in order to increase ad spending, as well as concerns regarding the privacy of reviewers.
Astroturfing
As Yelp became more influential, the phenomenon of business owners and competitors writing fake reviews, known as "astroturfing
Astroturfing is the practice of masking the sponsors of a message or organization (e.g., political, advertising, religious or public relations) to make it appear as though it originates from and is supported by grassroots participants. It is a p ...
", became more prevalent.[ A study from Harvard Associate Professor Michael Luca and Georgios Zervas of ]Boston University
Boston University (BU) is a private research university in Boston, Massachusetts. The university is nonsectarian, but has a historical affiliation with the United Methodist Church. It was founded in 1839 by Methodists with its original campu ...
analyzed 316,415 reviews in Boston and found that the percentage of fake reviews rose from 6% of the site's reviews in 2006 to 20% in 2014. Yelp's own review filter identifies 25% of reviews as suspicious.
Yelp has a proprietary algorithm that attempts to evaluate whether a review is authentic and filters out reviews that it believes are not based on a patron's actual personal experiences, as required by the site's Terms of Use. The review filter was first developed two weeks after the site was founded and the company saw their "first obviously fake reviews".[ Filtered reviews are moved into a special area and not counted towards the businesses' star-rating.][ The filter sometimes filters legitimate reviews, leading to complaints from business owners.][ New York Attorney General Eric T. Schneiderman said Yelp has "the most aggressive" ]astroturfing
Astroturfing is the practice of masking the sponsors of a message or organization (e.g., political, advertising, religious or public relations) to make it appear as though it originates from and is supported by grassroots participants. It is a p ...
filter out of the crowd-sourced websites it looked into.[ Yelp has also been criticized for not disclosing how the filter works,][ which it says would reveal information on how to defeat it.]
Yelp also conducts "sting operations" to uncover businesses writing their own reviews. In October 2012, Yelp placed a 90-day "consumer alert" on 150 business listings believed to have paid for reviews. The alert read "We caught someone red-handed trying to buy reviews for this business". In June 2013, Yelp filed a lawsuit against BuyYelpReview/AdBlaze for allegedly writing fake reviews for pay. In 2013, Yelp sued a lawyer it alleged was part of a group of law firms that exchanged Yelp reviews, saying that many of the firm's reviews originated from their own office. The lawyer said Yelp was trying to get revenge for his legal disputes and activism against Yelp.[ An effort to win dismissal of the case was denied in December 2014. In September 2013, Yelp cooperated with Operation Clean Turf, a sting operation by the New York Attorney General that uncovered 19 astroturfing operations.][ In April 2017, a Norfolk, Massachusetts, jury awarded a jewelry store over $34,000 after it determined that its competitor's employee had filed a false negative Yelp review that knowingly caused ]emotional distress
In medicine, distress is an aversive state in which a person is unable to completely adapt to stressors and their resulting stress and shows maladaptive behaviors. It can be evident in the presence of various phenomena, such as inappropriate so ...
.
In December 2019, Yelp won a court case that challenged the company's explanation of how its review recommendation software worked. The court ruling stated that "None of the evidence presented at the trial showed anything nefarious or duplicitous on the part of Yelp in connection with the assertions made in the Challenged Statements." This was one of a number of court cases that ruled in favor of Yelp over the years.
Alleged unfair business practices
Yelp has a complicated relationship with small businesses.[ There have been allegations that Yelp has manipulated reviews based on participation in its advertising programs. Many business owners have said that Yelp salespeople have offered to remove or suppress negative reviews if they purchase advertising.][ Others report seeing negative reviews featured prominently and positive reviews buried, and then soon afterwards, they would receive calls from Yelp attempting to sell paid advertising.
Yelp staff acknowledged that they had allowed their advertising partners to move their favorite review to the top of the listings as a "featured review", but said the reviews were not otherwise manipulated to favor the partner businesses.] Such featured reviews were shown with a strip above them that said "One of nsert Business Heres Favorite Reviews" and "This business is a Yelp sponsor." The company also said it might have had some rogue salespeople that misrepresented their practices when selling advertising services. In response to the criticism of their allowing their advertising partners to manipulate the review listing, Yelp ceased its "featured review" practice in 2010.[
Several lawsuits have been filed against Yelp accusing it of extorting businesses into buying advertising products. Each has been dismissed by a judge before reaching trial.][ In February 2010, a class-action lawsuit was filed against Yelp alleging it asked a Long Beach veterinary hospital to pay $300 a month for advertising services that included the suppression or deletion of disparaging customer reviews. The following month, nine additional businesses joined the class-action lawsuit, and two similar lawsuits were filed. That May the lawsuits were combined into one class-action lawsuit, which was dismissed by San Francisco U.S. District Judge ]Edward Chen Edward Chen may also refer to:
* Edward Chen (actor) (born 1996), Taiwanese actor and singer
* Edward Chen (politician) (born 1945), Hong Kong politician and academic
* Edward M. Chen (born 1953), American federal judge
* Eddy Chen (born 1993), a ...
in 2011. Chen said the reviews were protected by the Communications Decency Act of 1996
The Communications Decency Act of 1996 (CDA) was the United States Congress's first notable attempt to regulate pornographic material on the Internet. In the 1997 landmark case ''Reno v. ACLU'', the United States Supreme Court unanimously struck ...
and that there was no evidence of manipulation by Yelp. The plaintiffs filed an appeal. In September 2014, the United States Court of Appeals for the Ninth Circuit
The United States Court of Appeals for the Ninth Circuit (in case citations, 9th Cir.) is the U.S. federal court of appeals that has appellate jurisdiction over the U.S. district courts in the following federal judicial districts:
* District ...
upheld the dismissal, finding that even if Yelp did manipulate reviews to favor advertisers, this would not fall under the court's legal definition of extortion.
In August 2013, Yelp launched a series of town hall style meetings in 22 major American cities in an effort to address concerns among local business owners. Many attendees expressed frustration with seeing Yelp remove positive reviews after they declined to advertise, receiving reviews from users that never entered the establishment, and other issues. A 2011 "working paper" published by Harvard Business School
Harvard Business School (HBS) is the graduate business school of Harvard University, a private research university in Boston, Massachusetts. It is consistently ranked among the top business schools in the world and offers a large full-time MBA p ...
from Harvard Associate Professor Michael Luca and Georgios Zervas of Boston University
Boston University (BU) is a private research university in Boston, Massachusetts. The university is nonsectarian, but has a historical affiliation with the United Methodist Church. It was founded in 1839 by Methodists with its original campu ...
found that there was no significant statistical correlation between being a Yelp advertiser and having more favorable reviews.[ The Federal Trade Commission received 2,046 complaints about Yelp from 2008 to 2014,][ most from small businesses regarding allegedly unfair or fake reviews or negative reviews that appear after declining to advertise.] According to Yelp, the Federal Trade Commission finished a second examination of Yelp's practices in 2015 and in both cases did not pursue an action against the company.
Journalist David Lazarus
David Lazarus is an American business and consumer columnist who works for ''KTLA'' and worked for the ''Los Angeles Times'' from August 2007 to January 2022. His last column was published on January 28, 2022.
Early life and education
He attende ...
of the ''Los Angeles Times
The ''Los Angeles Times'' (abbreviated as ''LA Times'') is a daily newspaper that started publishing in Los Angeles in 1881. Based in the LA-adjacent suburb of El Segundo since 2018, it is the sixth-largest newspaper by circulation in the Un ...
'' also criticized Yelp in 2014 for the practice of selling competitors' ads to run on top of business listings and then offering to have the ads removed as part of a paid feature.
In 2015, San Francisco filmmaker Kaylie Milliken was reportedly producing a documentary film titled ''Billion Dollar Bully
''Billion Dollar Bully'' is a documentary film about Yelp and its alleged business practices. The film is directed by Kaylie Milliken and produced by Prost Productions. The film was released on May 21, 2019.
Production background
Milliken said th ...
'' about Yelp's alleged business practices.
In 2018, in the case ''Hassell v. Bird'', the California Supreme Court held by a narrow 4-3 margin that a business cannot force Yelp to remove a review, even if the review is defamatory of the business.
A 2019 investigation by Vice News
Vice News (stylized as VICE News) is Vice Media's current affairs channel, producing daily documentary essays and video through its website and YouTube channel. It promotes itself on its coverage of "under-reported stories". Vice News was create ...
and the podcast Underunderstood found that in some cases, Yelp was replacing restaurant's direct phone numbers with numbers that routed through GrubHub
Grubhub Inc. is an American online and mobile prepared food ordering and delivery platform. The company is based in Chicago, Illinois.
Founded in 2004, it is a subsidiary of the Dutch company Just Eat Takeaway since 2021. Grubhub has been criti ...
, which would then charge restaurants for the calls under marketing agreements GrubHub has with restaurants.
Political expression and politically motivated ratings
Eater reported that between 2012 and 2015, a number of users who review restaurants on the site have posted reviews that contained comments about the political activities and political views of businesses and their owners or have submitted ratings affected by political motivations. The article found that in some instances, the Yelp review area for a business has become flooded with such review submissions after a business was involved in politically sensitive action. Yelp has removed reviews of this nature and has tried to suppress their submission.
Litigation over review content
According to data compiled in 2014 by the Wall Street Journal, Yelp receives about six subpoenas a month asking for the names of anonymous reviewers, mostly from business owners seeking litigation against those writing negative reviews.[ In 2012, the Alexandria Circuit Court and the Virginia Court of Appeals held Yelp in contempt for refusing to disclose the identities of seven reviewers who anonymously criticized a carpet-cleaning business. In 2014, Yelp appealed to the ]Virginia Supreme Court
The Supreme Court of Virginia is the highest court in the Commonwealth of Virginia. It primarily hears direct appeals in civil cases from the trial-level city and county circuit courts, as well as the criminal law, family law and administrative ...
.[ A popular public argument in favor of Yelp at the time was that a ruling against Yelp would negatively affect ]free speech
Freedom of speech is a principle that supports the freedom of an individual or a community to articulate their opinions and ideas without fear of retaliation, censorship, or legal sanction. The rights, right to freedom of expression has been ...
online. The judge from an early ruling said that if the reviewers did not actually use the businesses' services, their communications would be false claims not protected by free speech laws. The Virginia Supreme Court ruled that Yelp, a non-resident company in the state of Virginia, could not be subpoenaed by a lower court. Also in 2014, a California state law was enacted that prohibits businesses from using "disparagement clauses" in their contracts or terms of use that allow them to sue or fine customers that write negatively about them online.
Business Insider Investigation
A 2020 Business Insider Investigation questioned the culture, ethics and practices within Yelp.
“Elite” reviewers Selling Reviews
An April 2022 Vice article highlighted that some Elite reviewers use their status to sell reviews.
Community
According to ''Inc. Magazine
''Inc.'' is an American business magazine founded in 1979 and based in New York City. The magazine publishes six issues per year, along with surrounding online and social media content. The magazine also produces several live and virtual events y ...
'' most reviewers (sometimes called "Yelpers") are "well-intentioned" and write reviews in order to express themselves, improve their writing, or to be creative. In some cases, they write reviews in order to lash out at corporate interests or businesses they dislike. Reviewers may also be motivated by badges and honors, such as being the first to review a new location, or by praise and attention from other users. Many reviews are written in an entertaining or creative manner. Users can give a review a "thumbs-up" rating, which will cause it to be ranked higher in the review listings. Each day a "Review of the Day" is determined based on a vote by users.[ According to ''The Discourse of Online Consumer Reviews'' many Yelp reviewers are internet-savvy adults aged 18–25 or "suburban baby boomers".]
Reviewers are encouraged to use real names and photos. Each year members of the Yelp community are invited or self-nominated to the "Yelp Elite Squad" and some are accepted based on an evaluation of the quality and frequency of their reviews. Members may nominate other reviewers for elite status. Users must use their real name and photo on Yelp to qualify for the Elite Squad.[ To accept a nomination, members must not own a business. Elite Squad Yelpers are governed by a council and estimated to include several thousand members. Yelp does not disclose how the Yelp Elite are selected.] Elite Squad members are given different color badges based on how long they've been an elite member. The Yelp Elite Squad originated with parties Yelp began throwing for members in 2005, and in 2006 it was formally codified; the name came from a joking reference to prolific reviewers that were invited to Yelp parties as the "Yelp Elite Squad"." Members are invited to special opening parties, given gifts, and receive other perks. As of 2017, there are over 80 local Elite Squads in North America.
As of 2017, Yelp employed a staff of over 80 community managers that organize parties for prolific reviewers, send encouraging messages to reviewers, and host classes for small business owners. Yelp reviewers are not required to disclose their identity, but Yelp encourages them to do so.[
]
See also
* Crowdsourcing
Crowdsourcing involves a large group of dispersed participants contributing or producing goods or services—including ideas, votes, micro-tasks, and finances—for payment or as volunteers. Contemporary crowdsourcing often involves digita ...
* Reputation management
Reputation management, originally a public relations term, refers to the influencing, controlling, enhancing, or concealing of an individual's or group's reputation. The growth of the internet and social media led to growth of reputation managem ...
References
External links
* Official websites
*
United States
*
United Kingdom
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