Google's $125 Million acquisition of Zagat last week is the most recent example that Google views itself as a content provider. Zagat is a creator of reviews and ratings for restaurants primarily. Originally a printed guide, Zagat recently reinvented its business model with a major move into web and mobile – placing them in prime competition with Yelp and Foursquare.
According to Google official blog, Marissa Mayer, Google's VP of Local Maps and Location Services, wrote, "Moving forward, Zagat will be a cornerstone of our local offering — delighting people with their impressive array of reviews, ratings and insights, while enabling people everywhere to find extraordinary (and ordinary) experiences around the corner and around the world."
This is the latest move (Blogger, YouTube, Google TV) in Google's march to become a content creation company.
So what does all this mean? Its bad news for Yelp and other media companies in the review space. Just like Google's acquisition of ITA, was bad news for travel sites, when Google acquires a leader in a content vertical and points its firehose of search traffic to that site, its game over for the other publishers. This is a smart business move for Google – why just get paid for the click – why not also capture the revenue that is generated from these clicks?
My take: Google is not just a search engine. Do publishers really want to outsource their monetization to a competing media company? And if Google hasn't entered your industry yet, how long until they start offering competing content? Remember, their mission is to "Organize the world's information and make it universally accessible and useful." So that doesn't leave out much.
But maybe the best take comes from Marissa Meyer, who said four years ago (when Google was still just a search company): "To the degree that we host content, we ultimately have a monetary incentive to drive people to those pages if those pages have ads on it." Marissa Mayer, Google VP (June 23, 2007)