Over the past few months tons of innovative companies have been facing lawsuits and legal challenges: Google, Apple, Twitter, Facebook, and Yelp.
The Yelp cases offers the clearest example of the Law vs. Innovation. Over the past few weeks Yelp has been sued twice. Cats and Dogs Animal Hospital Inc. v. Yelp Inc. and D’ames Day Spa of San Diego County v. Yelp Inc. accuse Yelp of running an “extortion scheme,” that punishes businesses who do not pay Yelp’s $300/month advertising fees. Cats and Dogs accuses Yelp of offering to remove negative reviews of their business if they started paying $300 a month to advertise, while D’ames claims that Yelp removed 13 positive reviews that were posted about the business.
Both of these cases are fascinating examples of an antiquated legal system failing to understand innovation. I have managed dozens of our client’s Yelp presences. In some cases paying for advertising and in others using the free business owner tools the company makes available to everyone. To explain why both of these suits are misinformed let’s take them one at a time.
In the D’ames case the owner of the San Diego Day Spa was trying to run a promotion on GroupON – a popular deal of the day website. GroupON told D’ames that she needed more online reviews to be featured. So D’ames started asking her customers to write reviews of her spa on Yelp. Fourteen reviews were posted quickly and thirteen of them were removed. Why? You ask.
Innovation.
What separates Yelp from all other review portals is two things, really: community and authenticity (a product of innovation). Yelp’s founders noticed that most local business, review sites were stuffed with glowingly positive reviews that the owners asked friends to write (and in some cases wrote themselves!) Dubbed, Citysearch syndrome, this rendered almost all of the digital directories of the late 90′s totally useless.
Yelp’s founders came out of Paypal where they cut their teeth smoking out the fraudsters and scammers that plagued the early consumer web. So when it came to restaurant reviews, they easily developed an algorithm to automatically remove all reviews that appeared to be fake. In practice, this means if you sign up for a Yelp account solely to rate your friend’s business with five stars, your review will be removed. Reviews that stick are active participants of the Yelp community. They seem to come from people who review multiple businesses and don’t simply lavish praise (or harshly criticize) every business they rate.
Though Yelp keeps most of the details of their secret sauce under wraps, Yelp is completely transparent about the practice of removing solicited reviews. The company offers education on its website and via one-one-one conference calls with Yelp Community Managers for free to all businesses listed on the site. In both cases Yelp says its algorithm aggressively removes reviews that appear fake or solicited.
The Cats and Dogs case at least accuses Yelp of doing something the company says it doesn’t. The veterinarian claims that Yelp offered to remove one bad review if they paid for advertising. Yelp does offer fringe benefits to advertisers, such as a cooler photo gallery and the ability to highlight one good review by posting it at the top of the business’s profile. However, Yelp does not allow business to pay to remove reviews. I know. I’ve tried!
In the past I have worked with the occasional business with really bad Yelp press. I have asked, even begged to make bad reviews disappear, but Yelp has a firm policy against removing any review unless it is done by the Review Filter algorithm.
Today 25 million people turn to Yelp for reviews every month. It is the most trusted source of local reviews online. This is all a product of a company innovating. These recent suits are the result of a legal system failing to do the same.
Over the past few months tons of innovative companies have been facing lawsuits and legal challenges: Google, Apple, Twitter, Facebook, and Yelp.
The Yelp cases offers the clearest example of the Law vs. Innovation. Over the past few weeks Yelp has been sued twice. Cats and Dogs Animal Hospital Inc. v. Yelp Inc. and D’ames Day Spa of San Diego County v. Yelp Inc. accuse Yelp of running an “extortion scheme,” that punishes businesses who do not pay Yelp’s $300/month advertising fees. Cats and Dogs accuses Yelp of offering to remove negative reviews of their business if they started paying $300 a month to advertise, while D’ames claims that Yelp removed 13 positive reviews that were posted about the business.
Both of these cases are fascinating examples of an antiquated legal system failing to understand innovation. I have managed dozens of our client’s Yelp presences. In some cases paying for advertising and in others using the free business owner tools the company makes available to everyone. To explain why both of these suits are misinformed let’s take them one at a time.
More Information…