Yelp is just about to turn 10 years old, and it got a big, fat, juicy birthday present from the 9th U.S. Circuit Court of Appeals: A dismissal of a suit claiming that the site is extorting businesses by manipulating ratings.
According to the ruling, if Yelp is manipulating ratings, it would be well within its rights to do so—something that might come as news to many users. Pitching itself as a reliable review site, Yelp sends the message to consumers that it’s a balanced source of information, with all reviews presented and weighed equally after the chaff are weeded out. If that’s not the case, it raises an important question about online review sites and whether they should be obliged to disclose weighting algorithms.
If you’re coming to Yelp and expecting a full, unvarnished picture of a business, you’re not getting the whole story. You never were, thanks to the site’s relevancy algorithm, but now, it turns out, you may also be getting a ranking influenced by the size of a business’ ad buy. Yelp is pay-for-play, and the court says that’s just fine.
Since the site hit the Web in 2004, it’s been attracting haterade by the gallon, and not just in the review threads for businesses. Business owners have repeatedly attacked Yelp, arguing that it causes financial harm. Some are concerned about the manipulation of ratings and search results, while others are frustrated by the fact that the company can effectively hold them hostage. Anyone can post a review, even if they haven’t actually been to a business or if the business attempted to resolve the problem.
A classic example came up over the weekend when ardent fans of Joan Rivers hit Yelp to trash the medical facility where she died during a routine outpatient procedure. A war begin to erupt in the comment thread associated with the business as loyal Yelpers took up their keyboards to criticize incomers, actual patients of the business weighed in, and angry members of the public kept coming. The result was a colossal mess that in no way reflected the clinic’s actual quality, precisely what critics of Yelp claim is its greatest flaw.
In fact, the question of whether the site’s reviews are that trustworthy and reliable has become such an issue that it’s being discussed in a separate lawsuit. Yelp is the company everyone loves to sue, with a number of suits in the past, plus pending litigation regarding its business practices and algorithm—like a suit from reviewers claiming that they’re uncompensated writers.
The details of this case are contingent upon the precise implementation of the Yelp algorithm—which, like many display algorithms, is kept a proprietary secret. In the name of their “real reviews, real people” mantra, the site discards an estimated 25 percent of reviews entirely on the basis of fraud. As the algorithm sifts through the reviews of a business, it determines which are actually relevant, which rankings should be retained, and what to display to the viewer.
It’s effectively a necessity on a site where anyone can post anything to weed out spam, deliberately destructive reviews, and other similar practices. The key question heard by the court was whether the algorithm also considered whether businesses were running advertisements with Yelp when it returned results, and—if so—if this was legal.
Plenty of business owners stepped up with evidence that their reviews and rankings changed depending on whether they had purchased advertisements. They claimed that rankings dropped when they declined to buy ads and immediately jumped when they took on ad contracts. Business owners also claimed that they were told there were “lots of benefits” to advertising, including having their reviews shifted upwards, or that negative reviews would be removed if they bought ads.
The summary of the decision declares: “[T}he business owners did not allege sufficient facts to support their claim that Yelp authored negative user reviews of their businesses.” Judge Marsha S. Berzon’s opinion further noted:
The business owners may deem the posting or order of user reviews as a threat of economic harm, but it is not unlawful for Yelp to post and sequence the reviews. As Yelp has the right to charge for legitimate advertising services, the threat of economic harm that Yelp leveraged is, at most, hard bargaining.
In their review of the case, the court failed to find evidence for “extortion” on Yelp’s part, but, perhaps more importantly, it failed to find a problem with controlling which reviews were presented, and in which order. Furthermore, Judge Berzon stated, Yelp makes no promise and has no obligation to businesses to provide them with positive reviews—and is perfectly within its legal rights to adjust rankings and reviews on the basis of whether companies buy advertising, even if this isn’t terribly fair (in the non-legal sense).
If there are any people who still believe that Yelp provides a totally unbiased look at a businesses, this ruling should explode that notion. Not only does Yelp operate with a man behind the curtain, as most online firms do, but that man can do effectively as he pleases with the information he choses to share. Companies can buy their way up in the ranks, and those that cannot afford it or refuse to do so will fall—and may fall in part because of negative reviews purchased by Yelp, a claim in the suit that Judge Berzon says the plaintiffs failed to substantiate.
What does this mean not just for Yelp, but for online review sites in general? When people purchase products and services, they turn to reviews on the Internet for more information, whether they’re looking for a place to eat or determining which slow cooker on Amazon is the best bang for their buck. They depend on reviews without considering the fact that they may be biased not just by a spam-stripping algorithm (that undoubtedly cuts out legitimate reviews, too) but also by how much a company is willing to pay. And that means they’re missing the larger picture.
Jay Barmann at SFist notes that, as a consumer:
It certainly makes one trust the integrity of [Yelp] that much less, however, knowing that they could continue bilking businesses this way with impunity, even if they have not admitted (and no one has fully proven) that all these business’ complaints have a basis in fact.
Yelp could barely contain its glee over the decision, which should be a warning sign to anyone who thinks the site is willing to be transparent about its reviewing and rating process.
Would the fact that reviews can be bought and sold change user perspectives of the sites they rely upon for reviews? It should—and the fact that the practice may be widespread means that people should be thinking about it wherever they go. And it’s possible that review sites, in turn, should be obliged to be transparent about how their algorithms work. While they don’t need to provide the source code, they should be able to roughly explain how they filter, and whether companies can pay to have their rankings adjusted.
After all, if the 9th Circuit Court thinks it’s a fair business practice, it’s not like they have anything to hide.