Google's 'fascinating' Zagat buy: 4 theories
The search giant stuns the tech world by acquiring the restaurant-ratings mainstay. What exactly is Google planning?
In a "fascinating" surprise move on Thursday, Google announced that it had acquired the restaurant guide company Zagat — known for its user-sourced ratings and 30-point scale — for an undisclosed sum. What exactly is Google up to? Here, four theories:
1. Getting into the content bizThe search giant has acquired more than 100 companies, but this is first time it's gobbled up a "pure content" creator, says Alexis Madrigal at The Atlantic. We're getting closer to "the convergence of every media, technology, and electronics company." Watch Google closely, says Larry Dignan at ZDNet. This could be "the beginning of a series of content moves for Google," and the "timing is notable given the struggles of both AOL and Yahoo of late." Those companies have been "building out content to differentiate themselves from Google. Now the search giant enters the content game via Zagat."
2. Getting back at YelpGoogle was reportedly rebuffed when it tried to buy Yelp for $500 million in 2009. Now, Google's got "the original model" in Zagat, says Garth Johnston at Gothamist. "Watch out, Yelp."
3. Getting into the local biz"The move boosts the company's efforts to grab a larger share of the fragmented but enormous local advertising space," says James Temple in the San Francisco Chronicle. This isn't completely new territory for Google — it launched Places, an online listings service, over a year ago — but Zagat represents a "dramatically new approach" to the local market. This also "crushes" restaurant reservation site OpenTable, says Shira Ovide in The Wall Street Journal. Shares sank 7.2 percent on news of the deal.
4. Getting into some thorny fairness issues"Now that Google owns Zagat, the obvious question becomes: Will it favor [Zagat] reviews over those created by competitors?" says Temple. Google has already provoked criticism by prominently listing its Google Maps, YouTube videos, and shopping listings in its search results. Expect more controversy if and when it gives priority to Zagat's restaurant reviews in search rankings.