Google's Acquisition of Zagat Should Scare Yelp

From the perspective of a tech blogger I can safely tell you that there have been countless times where companies have made decisions that I have had no choice but to question.  Sometimes my crucial outlook on business moves has been proven wrong, and I’m not shameful in the least to admit that I, like every other human being, am frequently incorrect.  But there are some moves that I question that have the exact opposite effect.  These moves don’t prove themselves to be well thought-out or well orchestrated.  Not by a long shot.  Rather, there are simply some business decisions that I’ve seen in the tech industry that continuously prove to be worse and worse for a given company.

Perhaps a great example of this concept is this week’s decision by online restaurant and rating site Yelp.com to trim up its deals team in the midst of constantly growing competition from sites like LivingSocial, Groupon, and Google’s “Google Deals” service that the company has been working to improve.  I mean, I can understand cutting back on a service that had little potential, but when it boils down to it I truly do believe that a daily deals service from Yelp is going to be something that the company is going to wish they had vested more effort into down the road.  After all, the sheer fact that there are so many other entities trying to absorb as much of the deals market as they can right now should speak pretty well for the fact that Yelp has shifted focus away from a very promising market.  And with Yelp’s standing, reputation, and loyal user-base, there isn’t a part of me that doesn’t believe that Yelp could have easily dominated the deals market had they chosen to allocate more staff into the project to give it the attention that it honestly deserves.

But as Yelp seems to have shifted focus away from the high-potential daily deals offerings, Google appears to have been beefing up their own position in the marketplace.  This weeks acquisition of Zagat, a world-wide restaurant guide that is flocked to by countless users around the world, is a prime example of Google’s quest to dominate the Internet deals market.  This purchase for Google is definitely one of great significance, as Zagat in itself has been around for more than 30 years (starting with paper guides) and has a very wide user-base.  And with the implementation of ratings and reviews on the modern-day website Zagat is, as it stands, very similar and competitive to what Yelp is today.

As if that weren’t enough to make Yelp…well, yelp…the company should definitely be keeping an eye out at what Google does to improve and build upon Zagat.  After all, have we ever known Google to be the kind of company to make an acquisition and not implement it into its own better service?  Exactly.

So when we look at the fact that Zagat is already an awesome site and is sure to see a number of new and innovative features once Google really gets its hands on it, it really does become apparent that Yelp is more than likely going to end up left in the dust.  It really is a shame, too, because I honestly think that the company had (and still has, if they make smart decisions fast) the potential to rival the market – including Google.  But after passing that up, I really don’t see a prime future for the site.  Really, I think Yelp is going to regret rejecting Google’s buyout offer two years ago.  Maybe I’ll be wrong.  Maybe Yelp has something else up its sleeve.  And honestly, as someone who loves Yelp, I honestly hope that I am wrong.