Why Google's Purchase of Zagat Is Direct Threat to Yelp, OpenTable


The Internet giant acquired the restaurant guide for a reported $100-$200 million.

Google's acquisition of restaurant review guide Zagat is part of the company's ongoing efforts to be a major player with local commerce assets.

The purchase expands the company's content on local businesses to include more than just directions. A Google rep told Reuters that the deal gives the Internet giant information about restaurants, hotels and nightclubs that can be paired with its popular online maps and mobile search services.

Yelp, Groupon and OpenTable are among the websites that will likely suffer from Google's latest acquisition. Since Yelp accepts restaurant and service reviews from anyone and Zagat combines submissions into a single trusted review, Google's local search results might be a "better place to start," muses The Wall Street Journal. Google could also begin offering a restaurant reservation service that replaces the current one offered by OpenTable that costs eateries hundreds of dollars in hardware costs.

Groupon, which offers consumers daily deals on products and services, is a subscription service; Google has already tested the waters for similar deals which would be open to all web user employing a search, not merely ones that sign up for e-mailings. The WSJ notes that nearly 17,000 people purchased tickets to New York's Museum of Natural History after a deal was promoted on Google.

Terms of the deal were not disclosed, but the New York Times reports that sources indicated the deal cost Google between $100 million and $200 million. Zagat reviews will supplement Google's Places reviews but the Zagat website will remain a paid site for now, notes the Times.

Google VP of local maps and location services Marissa Mayer emphasized the breadth of purchase in blog post Thursday, "With Zagat, we gain a world-class team that has more experience in consumer based-surveys, recommendations and reviews than anyone else in the industry.  Their surveys may be one of the earliest forms of UGC (user-generated content)—gathering restaurant recommendations from friends, computing and distributing ratings before the Internet as we know it today even existed."

She also noted that Google will integrate its existing search and maps tools to Zagat content, "For all of these reasons, I'm incredibly excited to collaborate with Zagat to bring the power of Google search and Google Maps to their products and users, and to bring their innovation, trusted reputation and wealth of experience to our users."