Is Yelp an Extortion Racket?

Does Yelp--a Web site featuring detailed user-reviews of restaurants and more--use strong-arm tactics on local businesses? That's the question the popular site must address in a class-action lawsuit filed by 10 businesses this month. They accuse Yelp of manipulating reviews to benefit business that advertise with them and punishing those that don't. Yelp reportedly reaches out to businesses when negative reviews are posted on Yelp. They notify the business of this fact and encourage them to buy advertising to improve their site's image. Is it extortion? Debate after the jump:

• Clearly, Yelp Is Ripping Someone Off, writes Kathleen Richards at East Bay Express: "Such tactics may be legal, but they clearly raise ethical concerns. Yelp touts its web site as consisting of 'real people' writing 'real reviews.' The allegations of business owners who have tangled with the company suggest otherwise. If Yelp indeed suppresses honest reviews in exchange for its advertisers' money, it is cheating users who expect genuine consumer feedback. Conversely, if Yelp demands payment to remove even dishonest reviews, then advertisers are being cheated. One thing is certain: In both cases, Yelp benefits."
  

• These Lawsuits Are Bogus, writes Tim Cavanaugh at Reason: "Yelp does not promise not to manipulate the content on its listing pages, and it is wise to assume an advertiser would get more benefit from that manipulation than a non-advertiser... Yelp's terms to my eye give Yelp the right to edit, highlight, disappear or do pretty much anything else with its customer reviews. That may or may not make it worth $2,600 a year for an animal hospital to get more favorable treatment. But it also doesn't seem like grounds for a suit."

• Both Sides Are Right, writes Henry Blodget at Business Insider: "We can conclude that all parties are technically correct. The Yelp salespeople who told the small-business owner that, by becoming an advertiser, she would be able to cause positive reviews to move up the page and negative reviews to move down the page were right. The potential Yelp advertiser was probably also justified in feeling bullied by this: If Yelp's salespeople are selling Yelp ads by repeatedly pointing this feature out, it's no wonder that some potential customers feel like they're being extorted. Meanwhile, CEO Jeremy Stoppelman was right that what the advertiser gets to do is to highlight one review as a 'favorite.' But as the example above shows, this is a much more powerful benefit than he makes it sound like it is. So is it extortion? We doubt it. But it's more than just advertising."
  

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