Inside the Yelp-Google Struggle - OZY | A Modern Media Company

Inside the Yelp-Google Struggle

Inside the Yelp-Google Struggle

By Hannah Kuchler


Because Google’s monopoly extends to policymakers.

By Hannah Kuchler

Jeremy Stoppelman likes to mock Google’s stock response to its critics: “On the internet, competition is one click away.”

The Yelp CEO laughs despairingly as he describes attempts to convince U.S. regulators to restrict what he believes is a “very successful monopoly.”

The “click away” line, he says, tripped off the tongues of every federal trade commissioner he spoke to. Google had gotten to them first.

“It was depressing, actually,” he says.

Stoppelman, 40, who co-founded Yelp, the customer reviews site, in 2004, has built a business in the shadow of the world’s biggest search engine.

He has accused Google of stealing Yelp’s review content, altering algorithms so rivals sink lower in search results, and creating an ecosystem of politicians, think tanks and startups to protect its dominance.

Stoppelman says he was told Yelp could always de-index from Google. He says this was a “false choice.”

Google denies it changes algorithms to put competitors at a disadvantage, saying in a statement: “Our responsibility is to deliver the best results possible to our users, not specific placements for sites within our results. We understand that those sites whose ranking falls will be unhappy and may complain publicly.”

Stoppelman has pursued the internet group through the regulatory systems in the U.S. and Europe for nearly a decade. Casually dressed, with an Apple Watch on his wrist, he describes how he formed his fightback strategy 10 years ago, before anyone had heard of big tech. He has targeted the press, regulators and even Google employees in an effort to save his business.


Even now, after a string of disappointments, Stoppelman is prepared to fight. “There are people out there who will talk about Google, but they are few and far between. It speaks to Google’s power. I mean, what’s the upside of speaking out?”

Yelp compiles reviews of local services, from restaurants to nail salons, plumbers to doctors. It generates revenue by selling advertising to these businesses. The company is on track to generate almost $1 billion in revenue this year. But compared with Google it is tiny: Traded on the New York Stock Exchange, it has a market capitalization of $3.7 billion, making it less than half of 1 percent of the size of Google.

The San Francisco–based company pulled out of Europe in 2016 after losing a battle with Google. Yelp invested tens of millions of dollars, but it abandoned the venture, laying off 175 employees.

Yet Stoppelman refuses to give up. Yelp recently filed a fresh complaint with the EU’s antitrust watchdog, arguing the search company abused its dominance and pressuring Brussels to bring new charges against Google.

When Stoppelman founded Yelp, he did not face much competition. He was part of a group known as the “PayPal Mafia” — early leaders of the payments company known for their connections and successful startups, who came to dominate Silicon Valley. The group includes Facebook investor Peter Thiel and Tesla founder Elon Musk. After they sold to eBay, Stoppelman went off to Harvard Business School.

After a year, he returned to San Francisco to help Max Levchin, another PayPal alumnus, with his startup incubator. Yelp was founded when Stoppelman got sick and could not find recommendations for a doctor online. Slipping into jargon, he says it was a “passion unlock” moment.

At first, Google was cooperative. Yelp even signed a partnership agreement with the company in 2005 to allow it access to some of Yelp’s reviews. But Stoppelman says he was “naive.”

The collaborative approach changed as Google grew, he says. “A company, even that maybe had good intentions at the outset, because of the pressures of growth, the pressures of Wall Street, the pressures of being on top, it turns you into a …” He struggles to find the right phrase to describe the search group. “A vicious player at some point.”

When competition gets tough, startups sell to bigger rivals. Google “was always dangling this carrot of ‘we might buy you,’” Stoppelman says. A sale was “seriously contemplated,” but in the end there was too much “bad blood.”

As CEO, Stoppelman had to first convince his investors to let go of the Google partnership in 2007, which was bringing in 5 percent of traffic. Losing 5 percent was hard — a drop does not look good on a startup’s pitch deck — but he says he moved fast so it did not worsen.

Yelp sought support from lobbyists (Stoppelman says he struggled to recruit them) and Silicon Valley’s influential bloggers. The startup got attention because Google’s maxim was “Don’t be evil.” Google employees vowed to be “googly” and journalists and commentators agreed that squashing rivals was most “ungoogly.”

For a while, the strategy worked. Google removed Yelp content from its Places app, but then it put it elsewhere and ultimately said scraping content was just how the web worked. Stoppelman says he was told Yelp could always de-index from Google. He says this was a “false choice.”

In early 2013, the U.S. Federal Trade Commission decided it would not pursue regulatory action against Google. Google signed a settlement with the FTC, where it agreed that websites did not have to be included in “vertical search,” such as the local boxes that appear on the right of the screen, even if they still wanted to be indexed in the main search results. Last year, Google renewed that commitment.

Now, Stoppelman is trying to recruit the rest of Silicon Valley to his cause. He often tries to convince startup founders to speak out, but says many are reluctant.

Ultimately, Stoppelman is unlikely to win. Google has the technological edge. At its recent developer conference, it showed how the Google Assistant will be able to call local businesses, requesting information without tipping off the restaurant or hairdresser that it is a robot. In the future, Google could simply collect the information curated by the Yelp community with a barrage of robocalls.

“They can literally call the whole world,” Stoppelman says.

By Hannah Kuchler

OZY partners with the U.K.'s Financial Times to bring you premium analysis and features. © The Financial Times Limited 2020.

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