Yelp sues Google, stoking fears of more antitrust battles

The online review site Yelp has filed a lawsuit against Google in a San Francisco federal court, accusing the search giant of illegally monopolizing the local search market.

In a blog post announcing this, Yelp co-founder and CEO Jeremy Stoppelman criticized Google for prioritizing its own services over fair competition with companies like Yelp, resulting in many searches that lead to zero clicks and keep users on Google’s search results page.

“Google has illegally leveraged its monopoly in general search to dominate the local search and local search advertising markets, engaging in anticompetitive practices that have lowered the quality of search results and sidelined competitors to expand its market power,” Stoppelman said in the post.

Significantly, this move comes shortly after a US District Court ruled that Google is a monopoly, having used its dominance in the online search market to stifle competition and prevent rival search engines from gaining market share.

After a lengthy trial, the court had found that Google spent tens of billions of dollars on exclusive contracts to secure and maintain its position as the default search engine on web browsers and mobile devices.

A potential precursor to more action

Yelp has consistently advocated for improvements to Google’s local search features, according to Stoppelman. However, the timing of this lawsuit has raised concerns about the potential for more legal actions against Google.

In his blog post, Stoppelman cited the District Court’s ruling and highlighted others, including the European Commission’s $2.6 billion fine on Google in 2017 for favoring its own shopping services and a recent investigation launched in March under the Digital Markets Act into Google’s self-preferencing in search results.

Prabhu Ram, VP of industry research at Cybermedia, pointed out that Yelp’s antitrust lawsuit against Google, following closely after the recent adverse ruling against the tech giant, might signal the beginning of a series of comparable legal challenges.

“If Yelp prevails, it may potentially compel Google to change how it presents local search results, potentially giving more visibility to competitors,” Ram said. “This shift could, in turn, compel businesses to re-evaluate their online presence and advertising strategies on Google.”

The major point of contention

Analysts point out that the main issue lies in the clashing business models, as both Google and Yelp depend on advertising revenue.

Additionally, there is significant concern over how user traffic is funneled to Specialized Vertical Providers (SVPs) like Yelp, Zillow, OpenTable, and Glassdoor.

“The discovery aspect is the primary area of conflict, given that Google has the ability to control and direct the majority of search traffic, whether to sponsored listings, its own properties, or these SVPs, as most user searches for a Point of Interest (POI) begin on Google,” said Neil Shah, partner and co-founder at Counterpoint Research. “For SVPs like Yelp, the expectation is that Google will fairly display results rather than directing traffic to its preferred destinations, which could harm their businesses. Transparency and fairness in this process are what Yelp and other SVPs are seeking.”

However, this argument may not be entirely persuasive, as both Google and Yelp operate on display advertising models.

Shah noted that Yelp applies similar tactics to Points of Interest (POIs) on its platform, effectively mirroring the treatment it claims to receive from Google.

“In Google’s defense, Yelp could ramp up its SEO practices or pay Google the ‘advertising fee’ to get promoted on the Google platform,” Shah added. “So, this lawsuit is a double-edged sword and can cut both ways for Yelp.”