Google Buys Zagat: Eyes Local Markets

Zagat has spent more than 30 years making and breaking reputations with its highly valued reviews of local restaurants, hotels and other businesses, and now Google intends to use that cachet to its advantage.

Google’s recent purchase of the New York-based firm has significance that reaches beyond the simple acquisition of a venerated source and recognized structure of business reviews. It is a pivotal move in the company’s effort to expand its role from a search engine provider to a content provider that can attract Web traffic in local markets.

It is also a way for Google to get what it wants without drawing further ire from the Federal Trade Commission (FTC), which is already investigating it for antitrust practices stemming from allegations that the company plays favorites in its search results and formerly used reviews from other sites on Google Places.

Owning Zagat will allow Google to use not only its reviews, but its entire review infrastructure – including its employees and network of contributors – to draw traffic to Google websites with a name synonymous with credibility.

The motivation for this is simple: Google wants access to the ad revenue it’s missing out on as a search engine. Google+ will eventually attract its share of marketing interest once more people sign on to the Google social networking platform, but the search giant’s ambition as a full-service content provider will not be realized without cornering the local markets that hinge on business reviews, which Google calculates as accounting for 20% of all searches.

Zagat was the perfect target for Google, especially considering its failed attempt at acquiring Yelp and its subsequent decision to use Yelp’s reviews anyway, until complaints from the company and FTC pressure forced Google to stop.

Zagat had been reported as being on the market for some time, and now Google can move forward with competing in earnest with companies like Yelp and TripAdvisor that have so far dominated the market of local business reviews and the wealth of Web traffic it creates.

This strategy appears to be a sign that Google is coming to realize it is no longer the darling of Internet innovation, and that competitors and the federal government may see fit to legally enforce its “Don’t Be Evil” motto.

Google would prefer to “borrow” reviews rather than buy the companies that craft them because it is cheaper and also helps defuse the antitrust argument, but the search giant may have to accept new ways of doing business as it seeks Internet domination.

Comments 

 

0 #2 Mario Dillero 2011-09-25 11:03

Interestin­g, I would say that was a good purchase. Now that they did it, I'm wondering why they didn't do it years ago. I guess that means it really was a good idea.

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+1 #1 Lisa Nord 2011-09-25 09:38

So, Google will now be printing and shipping survey books. Alongside running phone factories. The diversity of its models is quite alarming. Based on my experiences, Zagat has no where near the critical mass of online reviews to make this worth the time and effort.

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