Yelp Gets Massive ROI from Its Lobbying Efforts
In April, Richard Blumenthal (D-CT) of the Senate Commerce Committee encouraged the Federal Trade Commission to reopen its antitrust case against Google with respect to local search results. The FTC is now rumored to be doing just that.
The news made some waves in the search community, but not to the same extent as the antitrust investigations and fines of Google over Android.
When news first broke, I tweeted Yelp’s VP of Public Policy, Luther Lowe:
My take on Yelp vs. Google
I left a comment on Mike Blumenthal’s coverage of the Senate hearing with my perspective, placing Google in the context of its actual competition. Although I disagreed with Yelp’s specific arguments in 2011 when the case first came up, I was more sympathetic to them then than I am today–particularly since Yelp is a key partner of Google’s biggest mapping competitor, Apple.
There are plenty of analysts who argue (I could myself among them) that Google *needs* to provide an end-to-end experience on Google.com just to stay relevant in their competition with Amazon, Facebook, and Apple. Anything less than that might provide users with a more disjointed experience than what’s available from their competition.
– Amazon is not (currently) relevant in local search, but product searches only provide content from Amazon sellers.
– Facebook local searches provide content only from within the Facebook ecosystem, and I don’t see Yelp claiming that FB’s behavior is anti-competitive (even though, ironically, FB presents a FAR greater long-term threat to them).
– And, interestingly, Yelp has decided to cut a deal with Apple to power reviews and photos across a wide range of industries within Apple Maps. I don’t hear Yelp calling Apple’s behavior anticompetitive because they don’t link out to the websites of other directories, or even the businesses themselves.
It’s a very self-serving, narrow argument that Yelp is trying to pull off here, possibly because of bad blood from Google’s failed purchase attempt in 2010, but regardless, it’s an argument whose time has passed and misses the forest for the trees.
I left for vacation soon afterwards, and never did receive a response from Luther.
But the Commerce Committee/FTC’s renewed focus on local search seems particularly odd, in light of the simultaneous and far broader issues swirling around Android. If they want to skewer Google, surely the local search argument is far less persuasive than the Android one.
The oddity has continued to gnaw at me for the last few weeks, so I decided to do a little research.
A closer look at Yelp’s lobbying activity
Annual Lobbying by Yelp, via opensecrets.org
Yelp has rather quietly spent almost $700,000 on lobbyists in the last 18 months, including payments to the former general counsel of the Senate Antitrust committee, Seth Bloom.
The study on which the Commerce Committee and FTC are relying (co-authored by former FTC advisor Tim Wu) was sponsored by Yelp and co-authored by a consultant on Yelp’s bankroll, not to mention Yelp data science employees.
And the #1 congressional recipient of contributions from its PAC? Senator Richard Blumenthal, (D-CT).
Some analysts are already baking in the possibility of regulatory action into their evaluation of the stock.
All in all, that’s already a pretty good return on an investment somewhere in the neighborhood of $1 million. That’s a drop in the bucket compared to what Google/Alphabet has spent during the same period, and I’m sure they’re lobbying members of the Commerce Committee just as hard from the other side.
But if the FTC does reopen its case against Google, it’ll be a home run for Yelp, on a very small expenditure.
If only small businesses could get the same ROI from Yelp that Yelp has gotten from its lobbying efforts….
