Update: Google has disclosed the purchase price – $151 million. So, not under $66 million.
A few years ago, Zagat was trying to shop itself around for $200 million. Today, Google bought it for less than $66 million. The price wasn’t disclosed, but there was no FTC antitrust review, which is automatically triggered by any deal worth $66 million or more.
Google wants Zagat for its reviews. The mostly-print restaurant and city guides are filled with crowdsourced reviews from 350,000 readers who submit them. It sounds a little bit like Yelp, except with far fewer reviews. Yelp, by comparison, attracts more than 50 million users a month who have written over 20 million reviews. In fact, the acquisition is very much an attempt to catch up with Yelp, which values its reviews as a major asset, one which Google at one point tried to buy and then later borrow.
But as one Silicon Valley CEO puts it: “If you were losing to Wikipedia would your next move be to buy Encyclopedia Britannica?” The Zagat reviews will become part of Google Places and its overall local efforts. Google has struggled with local over the years, changing its product every few years. First there was Google Local, which was subsumed by Google Maps, and then Google Places (and don’t forget Hotpot). Now it’s got Zagat.
Nevertheless, it’s a smart move for Google. It needed to beef up its local reviews and ratings, and that’s exactly what Zagat lets it do. And they are ratings many consumers, or at least foodies, recognize. But will it help Google take on Yelp in local? Both Marissa Mayer, who is now head of local for Google, and Yelp CEO Jeremy Stoppelman will be at Disrupt next week. We’ll be sure to ask them.
Photo credit: Zagat Buzz