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Google ready to buy Yelp?

December 18, 2009 |  7:26 pm

Yelp LA screen grab In what could be a sign that Google is ready to train its computing power on the local advertising market, the search giant was reported today to be in talks to buy Yelp, a San Francisco company that enables users to review all sorts of businesses.

The website TechCrunch, citing anonymous sources, reported that the two companies are very close to an acquisition and that the price could be in the neighborhood of $500 million. Representatives of both companies declined to comment, according to Bloomberg News.

Analysts immediately noted that Google -- which acquired AdMob last month for $750 million -- is probably particularly interested in Yelp's sales force, which operates in 30 markets and knows how to sell to local advertisers. "This would be the closest Google has gotten to buying a 'sales force' with a meaningful 'on the ground' presence in the form of local editorial people in market and telephone salespeople," Greg Sterling wrote on Search Engine Land's website.

Though Yelp has occasionally incurred the wrath of local business owners -- over negative reviews posted on the site or aggressive sales tactics -- most of the company's revenue comes from selling ads to those businesses. The company disputes the main complaints and says it works hard to serve businesses fairly. The company has also empowered thousands of average people -- it calls them "Yelpers" -- to review restaurants, dentists, retail shops and scores of other businesses.

Yelp was founded in 2004 by former PayPal employees Jeremy Stoppelman and Russel Simmons, who started with a $1-million investment from PayPal co-founder Max Levchin. It has since received an additional $30 million from venture firms DAG Ventures, Bessemer Venture Partners and Benchmark Capital, Bloomberg reported. The company says it hosts more than 8 million reviews, and more than 26 million people visited the site in November.

-- Dan Fost

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