Yelp, Google Play Cat & Mouse, Investors Applaud - Analyst Blog

Yelp YELP shares jumped more than 4% after the EU sent a Statement of Objections to Google GOOG, which normally precedes anti-competitive charges and lawsuits if the matter isn’t settled otherwise.

Yelp, along with travel site Expedia EXPE and search engine provider Microsoft MSFT has previously complained against Google’s favoring its own services over competitors using its search engine to reach customers.

Google General Counsel Kent Walker started off saying that more than 40% of Yelp customers used its services through the Yelp app, implying that Yelp was not as dependent on Google as it was pretending to be.

Yelp responded in a Twitter TWTR post saying that Google’s General Counsel's memo claim regarding Yelp's mobile app traffic was “incorrect, absurdly inaccurate.” Company officials had apparently only said that 40% of searches done on Yelp properties were through its app, but they hadn’t mentioned where the searches originated.

Yelp can’t afford to say much more without undermining its app and therefore arousing investor concern. If it says it is highly dependent on Google, it will strengthen its anti-competitive case, if it says it is less dependent, this speaks of the strength and performance of its own app.

Google maintains that the move to mobile is changing things completely since consumers on mobile devices spend 7 out of 8 minutes on apps. Yelp has seen very strong growth in mobile unique users, up 37% year over year to 72 million in the last quarter itself. Compare this with the total unique user count of 135 million, which was up 13%. What this means is that mobile users (the ones using apps) were 53% of Yelp’s unique users in the last quarter and growing at a much faster rate than overall users.  

Google says that Yelp currently calls itself the “de facto local search engine,” posting revenue growth of 350% over the past four years.

Both Google and Yelp shares currently carry a Zacks Rank #3 (Hold).

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