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May 22, 2013

No, Yelp Doesn’t “Extort” Small Businesses. See For Yourself.

Some news outlets have recently run stories or columns re-hashing the sensational allegation that Yelp manipulates reviews and ratings to reward advertisers or punish non-advertisers. Let me be clear: This claim is not -- and has never been -- true.  

And you don’t have to take just my word for it. Consider the following:

1. Third party research has debunked the conspiracy. Independent (i.e., not commissioned or paid for by Yelp) ongoing research by Harvard Business School and Yale professors has found no connection between advertising and our automated filtering (see the Conclusions page of this study here).

2. Courts have rejected the conspiracy. Some business owners have even gone so far as to take these accusations to court, but their claims keep getting dismissed for lack of any fact-based evidence.

3. A simple Google search debunks the conspiracy. Want to see if businesses that advertise on Yelp really do get “special treatment?” Feel free to do your own version of a simple Google test like this [site:yelp.com/biz “Yelp advertiser” AND “rude staff”] by inserting your own negative phrases in the last set of quotation marks. The words "Yelp Advertiser" only appear on pages of advertisers, which begs the question: if these Yelp advertisers get a special “Delete” button for negative reviews, why in the world aren’t they using it? (Hint: because it doesn’t exist.) Nor is there any rational incentive for a Yelp sales team member to jeopardize his or her career by pitching a product that can’t be delivered because it doesn’t exist.

Alternatively, you can find thousands of non-advertisers with excellent four and five-star ratings on Yelp. They are benefiting from positive online word-of-mouth that Yelp enables for free. (In fact, a recent consulting group survey found that businesses that do nothing more than take advantage of the free tools Yelp provides receive an average of $8000 in revenue attributable to Yelp.)

So why does this misbelief exist? Ironically, it stems from Yelp’s efforts to protect consumers from those who are constantly trying to game the system. Yelp uses automated software to showcase the most helpful and reliable reviews from among the millions submitted. Those that don’t make the grade -- about 20 percent -- are posted to a separate "Filtered Review" page. So, in trying to prevent unethical wrongdoing on Yelp, Yelp gets accused of the same.

The good news is that only a small minority of businesses attempt to write or buy fake five-star reviews about their own businesses or fake one-star reviews about their competitors, but it’s pervasive enough that anti-gaming measures are required. Yelp’s automated software is designed to protect both consumers and small businesses.

One downside of having automated software screen more than 39 million reviews is that some perfectly legitimate reviews are inevitably caught in the filter. This is the price we have to pay given the reality of efforts to mislead consumers. If consumers can’t trust Yelp’s content to give them an accurate prediction of their offline experience with a business, the site won’t be useful to anyone -- consumers looking for great local businesses and great local businesses looking to be discovered by new customers.

Presumably, those reporters in the stories mentioned earlier were seeking to give a voice to the small business owner as the “little guy,” but in the process seem to have forgotten about another “little guy”: the consumer who is looking for honest assessments of local businesses and not the misdirection of deceptive or biased reviews.

Yelp protects review content integrity in order to preserve the helpful ecosystem for both “little guys.” Which is why more than 100 million people turned to Yelp last month.