Google Buying Yelp at a Rumored $500 Million

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Yelp Decides Not to Sell - No Google Deal

yelp-logoIt’s been known for months that Google was interested in and negotiating with Yelp, the consumer search and rating site, for a buyout. The New York Times confirms the story today, stating that the purchase negotiations are underway and the price may be $500 or more.

Yelp is on more serious footing than ever before, having brought in $31 million in venture capital and reportedly looking at revenue almost matching at $30 this year. Yelp dominates the local business listings and reviews. It was founded by Jeremy Stoppelman and Russel Simmons of PayPal fame in 2004.

TechCrunch reports that Yelp has at least 9 million verified monthly unique visitors while Yelp says the number is closer to 25 million. Yelp also expects income in 2010 to be around $50 million and the site currently boasts about 8.5 million local reviews.

With the recent push by Google to incorporate Yelp-like services on their own search results (called Place Pages), catering to local businesses, the acquisition seems like an obvious step for Google.

Interestingly, Gigaom (Om Malik) is saying that Yelp would be fools to bypass this buyout as their time in the local business space is limited. He cites the emergence of Twitter and Foursquare as the long-term death knell for the local business search site. That’s an interesting observation, though probably a little over stated.

With the buyout being reported as “80% probable” and with Google likely willing to pay even more should another buyer come forward to try to cut in (Google recently paid a reported $750 million for AdMob), I think the selling of Yelp is imminent.

Now the question is: will Google integrate this with their pilot program for Place Pages in which they distributed about ten thousand QR code window stickers so visitors to businesses could look the business up on Google Maps/Place Pages quickly? Or will this be the beginning of an entirely new local search offer from the Silicon Search Giant?

That’s hard to say, but Google is clearly seeing that the direction of search is no longer “more is better” and that discerning Web browsers are looking for relevant, localized information.