Trump's Pick for FTC Head Shines Spotlight on Google-Yelp Feud

By Published on .

Yelp CEO Jeremy Stoppelman.
Yelp CEO Jeremy Stoppelman. Credit: Noah Berger/Bloomberg

Tech companies either expelled a sigh of relief or swallowed some disappointment after President Donald Trump nominated Joseph Simons on Thursday as the Federal Trade Commission's new head.

Google and Yelp, for example, are surely following the news: They are locked in a messy, decade-long feud involving federal regulators and major ad spending both here and abroad.

Yelp, the popular local review site, has recently been telling advertisers that its read on consumers' intent—specifically their intent to spend money shortly after they do a search—consistently outperforms Google's.

It's a bold claim, because marketers widely regard Google as the gold standard on that very point.

Yelp says Google doesn't play fair, even stealing valuable content from Yelp's platform to use on its own competitive product. And that's where who runs the FTC comes into play—at least if Yelp has its way.

"I would argue them leveraging their monopoly power and web search to suppress competition in local search and other verticals has reached the point where regulators have come to us asking questions," says Jeremy Stoppelman, co-founder and CEO of Yelp. "We've been happy to provide what we've seen, and the means and methods to tilt the playing field in their favor even when they don't deserve it."

Last month, Yelp sent a letter to the FTC urging the agency to "take action and remedy" on the theft of content, primarily photos, concerning local businesses from Yelp and other sites. The company claims Google scraped nearly 386,000 images from its platform and then used them on its own platform, which it calls a direct violation of a 2013 FTC settlement. In that deal, Google agreed to allow companies like Yelp to opt out of letting Google to scrape content for use in its search results.

The European Union recently fined Google $2.7 billion for favoring its Shopping service over competitors. Although not related to Yelp's cause, it has seeded optimism at Yelp that a similar outcome will affect the way Google surfaces local business reviews and information.

"We're very encouraged by the efforts in the E.U.," Stoppelman says. "They've fined Google now, and done a lot of things in the Shopping category and we're encouraged and hope they will look at the local category as well, which we have some reason to believe that is on the agenda, but we'll have to wait and see."

FTC nomination a 'polar opposite' for tech
Simon's potential ascent to lead the FTC is less obviously encouraging for Yelp.

The FTC is responsible for a litany of different regulatory compliance requirements. Companies that violate these rules are often hit with hefty fines and annual inspections from regulators or third parties for the following 20 years to make sure violating outfits remain in compliance.

There was earlier speculation that Trump was eyeing Utah Attorney General Sean Reyes to chair the FTC. Reyes is considered sometimes tough on business, though: He signed a letter to the FTC last year asking it to consider new information in an antitrust investigation against Google that it closed in 2013.

Simons is an antitrust lawyer who's worked for companies including Microsoft, MasterCard and Sony. It's not clear what course he would take in the job.

"Simons would be the polar opposite of what we have been used to," says Renee Murphy, a principal analyst at Forrester who covers areas like regulation. In the Obama era, the FTC was focused on consumers first, more than businesses, she says. "They were looking to claw money back and set stuff right."

"Do you hire an antitrust lawyer like Simons because you want to smack down antitrust," Murphy adds, "or did you hire that person because you want to clear regulation and make it easier for anyone to do anything they want?"

But the FTC's actions under the prior administration helped fuel the big E.U. fine, according to Murphy, saying the E.U. partly relied on information from the FTC investigation. "Google's geopolitical world is much bigger, but that also means they have to think about their flank, because they may have a friendly in the FTC, but they may not have one in Europe," she says. "We may not have the stones here, but that may not be true in Europe because case study is in Yelp's favor."

Through the first nine months of 2017, Google parent Alphabet spent $9.5 million in lobbying, ranking it seventh and ahead of all other tech companies, according to, a nonpartisan research group that tracks money spent in politics. In contrast, Yelp spent $200,000 during the same timeframe.

Yelp's newest pitch
Regardless which way regulation pans out, Yelp feels that Google is its direct competitor. And Yelp is increasingly trying to convince advertisers that its search offering is better.

"When people come to Yelp they're searching for something they are about to transact on," Stoppelman argues. "If you're an advertiser, you want to be at the place where that user has flexibility and is making a decision."

Simona Krebs, brand and guest relations manager at Togo's Eateries, says the company has been advertising on Yelp for five years. "Although it is a higher cost per click, conversions are a lot better," Krebs says. "Typical conversions are 3 percent on Google, but on Yelp, we're seeing 30 percent and in one case, 33 percent."

The audience may be bigger on Google, she concedes. "But the purchase intent is not as strong."

Sam Rovner, senior media specialist at Discount Tires and a client of both Google and Yelp, doesn't necessarily agree.

"It's like comparing apples to artichokes," Rovner says. "With Yelp, we're connecting with consumers who have a higher intent to purchase. Being in that kind of space it is a no-brainer for us when you have an operation as large as ours."

But Rovner argues Yelp is evem more for connecting with disgruntled (or satisfied) consumers and making sure local listings are up to date.

Stoppelman counters that someone who searches for "tires" on Google might be seeking general information about tires, or their history, or their design—you get the idea. They go to help to find a place to buy, install or fix tires.

"The vast majority of Yelp users are purchasing something within a short time, or 24 hours after they've searched," he says. "Our millions of consumers are coming to the us when they're ready to spend their hard earned money."

This year, Google will remain the dominant player in worldwide search ad spending. According to eMarketer, the company will capture $59.6 billion in search ad revenue in 2016, or 59 percent of the search ad market.

Yelp is due to report its third-quarter earnings Nov. 1.

Most Popular