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Why Yelp Should Fear Facebook's New User Review Platform

With more than 1 billion users, Facebook could dominate crowd sourced reviews

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Market analysts have been eyeing Yelp's share price (Nasdaq: YELP) with newfound curiosity this week after it was revealed that Facebook was potentially making a big play in the local business directory and crowd-sourced reviews space. The social media juggernaut that Mark Zuckerberg built has what looks like the makings of a serious Yelp competitor in Facebook Professional Services, which exhorts users to "Find local businesses with the best Facebook reviews and ratings."

The currently desktop-only tool lists myriad local businesses post-search, just like Yelp, with embedded cumulative star ratings, location information, and both user-generated and official newspaper reviews to boot. Users can then proceed to a business's Facebook page to obtain more information.

Screenshot: Facebook

At first glance, Facebook's net seems almost as widely cast as Yelp's. A test search of New York businesses turned up the likes of yoga studios, pet stores, chiropractors, art museums, and, natch, bars and restaurants. From a company with over a billion active users that has practically usurped the role of the traditional business website, this isn't entirely surprising.

Facebook was ostensibly a de facto, lurking competitor of Yelp before. The difference here is the pooling of best-rated restaurants, plumbers, massage therapists — you name it — on an unambiguous, standalone platform that already commands the attention span of millions of users every day. Note that this is a consequential departure from Facebook's previously tentative forays into Yelp territory. That's what analysts are buzzing about, and that's what might be giving Yelp co-founder and CEO Jeremy Stoppelman pause.


Screenshot: Yelp

At minimum, these new Professional Services pages seem like an attempt to reorganize, and recontextualize Facebook's extant business pages.

While there's reason for Yelp to fear, it's still premature to declare Facebook Professional Services an all-in attempt to outmaneuver Stoppelman and Co. Of primary concern is the fact that the platform is not yet on mobile. Additionally, it lacks Yelp's robust features. A side-by-side comparison shows that though Facebook's new pages include relevant newspaper reviews and star-ratings, along with ratings and recommendations from users' Facebook friends, Facebook's business page search lacks the sophistication of Yelp's. There are no helpful filters, and the information and reviews are not presented in a manner one might describe as "at a glance;" there's some scrolling and clicking around to be done on Facebook. Yelp's user interface demonstrates a knowledge of how the user interacts with this sort of basic information; Facebook is still learning.

Additional features that both Google Maps and Yelp have — including food delivery and restaurant reservations — are not included on Facebook's business pages. At minimum, these new Professional Services pages seem like an attempt to reorganize, and recontextualize Facebook's extant business pages. Which is not necessarily a bad move, and one that could be interpreted as a step in the Yelp direction. Facebook did not immediately respond to a request for comment.

The stakes in the local business review market are enormous, with numerous players, Google most notably, jockeying for position over the years. In 2009 the search giant failed in its bid to acquire (and ape) Yelp. Google's consolation prize? Zagat, which it bought in 2011. Zagat, however, is no Yelp. North America's most popular restaurant (and retail) review site was valued at a cool $2.9 billion last March. And Facebook should take note: tenacious Google isn't done trying to squash Yelp.