Social media giant Facebook (FB) seems to be comfortable only in a climate of disruption. After all, Facebook CEO Mark Zuckerberg advises his developers to “move fast and break things.” Unfortunately for the restaurant review site Yelp (YELP), Facebook may be breaking it soon.
Facebook recently rolled out a new initiative practically customized for going head-to-head against Yelp. It’s not the first time Facebook’s developed something that could end up being a Yelp-killer, and at this rate, it may not be the last.
Unsurprisingly, this makes the bullish case for FB stock, which was already strong, even more robust. Meanwhile the bleak future for YELP stock becomes even more unavoidable.
Facebook, of course, is a pioneering tech giant researching and developing some of tomorrow’s most interesting technology. Yelp? People still openly debate how many of its reviews are phony. FB stock is up 25% in the last year, while YELP stock is down more than 27% over the same time.
Prepare for the divide to grow even greater.
YELP-Killer #1: Facebook Adding Restaurant Reviews
Over the last few years, there’s been no shortage of speculation that Yelp stock might make an attractive acquisition target for Silicon Valley heavyweights. Apple (AAPL), Microsoft (MSFT), Yahoo (YHOO) and Google (GOOG, GOOGL) were all at one point or another floated as potential suitors.
And yes, even Facebook itself has been thought to have an interest in Yelp.
But the sad fact of the matter is: No one wants you, Yelp. You won’t even get a sympathy date to the prom, so don’t ask.
Especially don’t ask FB, which now has powerful tools it can use to crush you — the latest of which Facebook announced last week:
FB is teaming with five renowned publications — Bon Appétit, Condé Nast Traveler, Eater, New York Magazine and the San Francisco Chronicle — to provide food reviews on restaurants’ Facebook Pages.
Who would you rather take dining advice from: A professional food critic? Or Yelp user “Gus M.,” whose reviews may or may not be paid testimonials and whose taste buds should not influence any aspect of your decision making?
As Oscar Raymundo, of the technology website Macworld, said,
“When it was revealed that Yelp was looking for a buyer, some wondered whether Facebook or Google could be potentially acquiring the longtime reviews hub. But it seems Facebook is taking a quality-over-quantity approach to reviews.”
That’s a nice way to put it.
YELP-Killer #2: Place Tips
Featuring professional reviews on FB is just the icing on the cake. The writing was already on the wall for YELP stock back in January, when Facebook announced Place Tips, a local business discovery tool only Facebook with its treasure trove of data could make feasible.
“When traversing the town, Facebook Place Tips will use your location to scan businesses nearby that you may be interested in. Then, a pink beacon will appear atop your News Feed, populating photos and posts by friends about those businesses.”
Again, I ask you: Why listen to the possibly apocryphal testimony of random stranger Gus M. on Yelp when you have at your disposal not only the opinion of expert food critics — but of your very own friends?
You wouldn’t. You shouldn’t. Even by the time FB decides to feature these services more prominently for its users, YELP still won’t have been bought up.
As of this writing, John Divine owned shares of AAPL, GOOG and GOOGL. You can follow him on Twitter at @divinebizkid or email him at firstname.lastname@example.org.