Reviews have become a fundamental element of local search, and the argument that Google is using its dominance to bury results from reviews sites beneath its own content is at the core of an antitrust case brought against the company by the European Union. Local search in Europe is extraordinarily complicated, a tangle of rules that vary from country to country and present great barriers to entry, making the presence of a giant like Google all the more intimidating.
Yelp has been vocal in its disapproval of Google’s handling of search results and is one of the complainants in the EU lawsuit. Street Fight recently caught up with Yelp’s head of EU public policy, Kostas Rossoglou (who will be a speaker at Street Fight’s upcoming LOCALCON conference in London on April 21st), about the specifics of the case and the particular challenges faced by European companies hoping to break into local markets.
How does regulation implemented by the EU affect Yelp?
There’s a lot of discussion in Europe right now about regulating online platforms and creating even more rules for online players. Yelp already has to comply with existing rules on consumer protection, ecommerce, IP, copyright, data protection, privacy — and over the last few years, there’s been political pressure from some of the European capitals. Countries like France and Germany are putting pressure on the EU to adopt more rules for online platforms, but no one really knows if there’s even a gap that needs to be filled. No one knows what the problems are, and if we need to legislate to solve them. There’s not been a comprehensive analysis of how the existing rules apply.
A lot of this comes from the fact that some national governments really want to target specific companies — Google, for example — because, if you look at the problems that France and Germany want to solve with more regulation, they relate to antitrust. It’s about the access of companies to Google search, and how Google is abusing its dominance to promote its own services. But we don’t need legislation to solve this problem. We have competition rules, we have antitrust enforcement, we have strong regulators. It’s all about ensuring that the antitrust authorities do their jobs and enforce the law.
Every time there’s a discussion about regulating online platforms, [Yelp is] concerned. But at the same time, we’re a complainant against Google in the antitrust case; we have a specific problem with a specific anti-competitive behavior. So let’s take a step back from creating more legislation and more rules, and trust the antitrust framework that already exists.
In your involvement with the EU’s case against Google, what have you learned about the competition that exists within the local search ecosystem? How might things change going forward, depending on the outcome of the case?
Local search is the biggest category of Google search queries, representing something like one-third of total desktop search volume and more than half of mobile searches.
Let’s say I’m a consumer looking for a dentist, and I go to Google. It will link to a map with results where I can find locations, and I can see reviews of a dentist. But the problem is, those reviews come from Google’s own ecosystem. Yelp might have hundreds of reviews of that same dentist that won’t [appear] there. Google’s using local search to promote its own vertical services. As a consumer, I’m looking for the opinions of my fellow consumers to make up my own mind. When I’m looking for a map or the weather, whoever gives me the answer is fine, it’s all the same [information]. But when it comes to reviews, these are subjective opinions, so if I can rely on hundreds of reviews instead of two for the same service, they’re more likely to be relevant and inform my choice. If competitors to Google don’t make it to the user, there’s no incentive to innovate and continue to grow.
Let’s assume Google is found in breach of antitrust law. They would have to stop their anticompetitive behavior and implement a remedy. What the ideal remedy is and how we can provide access to all the competitors is a separate discussion, but Yelp and TripAdvisor, together with other European companies, have already developed an idea called Focus on the User. It’s a plugin that allows Google to still use its own algorithm from organic search. With the plugin, you can [search on Google] and get hundreds of reviews from all services — Yelp, TripAdvisor, Google+. With the current situation, you might get only 25 reviews. It’s a big change for the consumer.
What are some unique characteristics of local search in Europe?
In the EU, there are 28 different markets. That means different languages and cultures. The expectations just aren’t the same. I always make a joke — I’m Greek, and in Greece you write a review only if you aren’t happy with the service you get. But if you go to Sweden or Norway, they’ll write a review about everything, especially when they’re happy with a service. If they like a restaurant, they’re going to write a review. My Greek friends only write reviews to complain.
And local is very local. Within the same country, you might have different regions with different mentalities. In terms of legislation, it’s so confusing. It’s a mess. Let’s say I’m a European startup from Finland, and I want to compete with Yelp and provide my services across Europe. It’s impossible. I would need to have huge capital to invest in lawyers, because when it comes to taxes, privacy, copyright, and consumer information, every country has different rules. It’s really difficult to get the scale to become successful.
Then you have the power games between regulators. Let’s say I’m established in Ireland, but I offer my services in Germany, France, and Italy. If something goes wrong, who’s responsible? Who is the authority? It’s not clear. So even the authorities are fighting with each other about who has power over a company. It’s not a very innovation-friendly environment. It would be ideal if a company who wants to offer services across Europe knows they can have the same set of obligations in every country. If you can harmonize legislation, you can create the framework for the development of European innovation. But we’re not there yet. It’s the exact opposite now.
Do you see that changing anytime soon? How can that process become smoother?
There’s a political willingness now to create the European digital single market, but the question is how to get there. For the moment, the approach being followed isn’t the right one, because we’re still talking about adopting more legislation for online platforms. The first step should be for the authorities to look at what is already on the table and assess and evaluate it. We need to evaluate what we currently have and clarify some of the notions and provisions, work together with businesses for some sort of self-regulation or co-regulation, and help companies come up with industry solutions that will apply for all the players.
Are there plans for Yelp to expand further in Europe?
It depends at least partly on the outcome of the [Google antitrust] case, because there’s no company that can afford to keep losing traffic because of anticompetitive behavior. Big, big players in local search are waiting on the outcome of this case. It will help define our strategy when it comes to Europe.
Annie Melton is Street Fight’s news editor.
Hear more from Kostas Rossoglou and Yelp at our upcoming conference on April 20-22 at the Chelsea Football Stadium in London. Click below for tickets!