Google is reportedly in talks to buy Yelp, the popular local review, for about $500 million, according to reports from TechCrunch and the New York Times.
Founded by two former PayPal employees, Yelp managed to do what numerous review sites, including CitySearch and Yahoo, failed to do: become cool. Popular restaurants in San Francisco and New York can often have hundreds of reviews, and Yelp, founded in October 2004, has spread to cities and towns around the nation.
With the very large exception of YouTube, Google has taken pains to not become a content provider – a far different strategy from Yahoo, Microsoft and AOL.
The proposed purchase likely signals that Google is eyeing a way to break open local advertising, which has still largely stayed away from the web. The size of the market for online, targeted local ads is estimated to be in the billions, but so far local merchants have not been convinced to give up on traditional direct marketing and local media.
Yelp makes its money mostly from businesses that pay to have "sponosored listings" show up when users search for nearby businesses or competing restaurants.
Reviews are also an important currency online for returning search results on mobile devices, such as Bing Map's "What's Nearby" feature and Google's own results for local searches.
Yelp's chief operating officer Geoff Donaker e-mailed reporters employees to tamp down speculation of a deal.
Update: 2:10pm PST - The story was updated with comment sent out by Yelp to employees.
Photo: Screenshot from Yelp's 'augmented reality' iPhone App
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