Updated 6:00 p.m., Friday Sept. 9
The way you find dinner listings is about to change.
Google announced Thursday it has purchased Zagat, the restaurant, hotels, and retail business reviewing company, for an untold sum.
In a post on the official Google blog, Marissa Mayer, vice president Local, Maps and Location Services, explains the company’s reasoning. She pointed to the long-established credibility of the service’s 30-point ratings system.
She also highlighted Zagat’s important to Google’s own local search listings (currently called Google Places.)
“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.With Zagat, we gain a world-class team that has more experience in consumer based-surveys, recommendations and reviews than anyone else in the industry.”
Mayer notes that “Their iconic pocket-sized guides with paragraphs summarizing and “snippeting” sentiment were “mobile” before “mobile” involved electronics.”
At the same time, it’s worth pointing out that Zagat has come a long way since it was founded in Paris in 1968 as a simple private journal by high-powered legal couple Tim and Nina Zagat: The company launched an iPad app earlier this year and has partnered with Urbanspoon and Tanqueray on other branded mobile apps.
But according to a note from the co-founding couple posted on Zagat’s website and Facebook page, Google was the perfect match for their company:
“After spending time with Google senior management discussing our mutual goals, we know they share our belief in user-generated content and our commitment to accuracy and fairness in providing users with the information needed to make smart decisions about where to eat, shop and travel…
“We are thrilled to see our baby placed in such good hands and to start today as official “Googlers.””
Terms of the deal haven’t been disclosed, but Zagat was valued at more than $100 million in 2000, when private-equity firm General Atlantic purchased a third of it, DealBook reported. The Zagat family put the whole company on sale for $200 million in 2008, but withdrew over a lack of offers to concentrate on “organic growth.”
That strategy appears to have paid off.
The move also marks Google’s highest-profile foray yet into original content creation, as ZDNet points out. Google tried to acquire local restaurant reviews website Yelp! in 2009 for $500 million but Yelp! turned down the offer and may be pursuing an IPO.
But it is also likely raise eyebrows in Washington given Google’s current antitrust troubles: Google Chair Eric Schmidt just visited the capital Wednesday to meet with congressmen ahead of next week’s Senate judiciary committee’s antitrust subcommittee hearings over whether or not the company has used its dominance over the search market to direct consumers away from competitors in its other business areas.
As Sen. Herb Kohl (R-WI) put it when announcing the investigation in March:
In recent years, the dominance over Internet search of the world’s largest search engine, Google, has increased and Google has increasingly sought to acquire e-commerce sites in myriad businesses. In this regard, we will closely examine allegations raised by e-commerce websites that compete with Google that they are being treated unfairly in search ranking, and in their ability to purchase search advertising. We also will continue to closely examine the impact of further acquisitions in this sector.
The FTC, too is investigating Google over alleged antitrust practices, specifically “looking into allegations that Google unfairly takes information collected by rivals, such as reviews of local businesses, to use on its own specialized site and then demotes the rivals’ services in its search results, the people said,” The Wall Street Journal reported.
We’ve reached out to the FTC and the Senate judiciary antitrust subcommittee about how this news will impact their investigations. We’ve also contacted Google and Zagat to find out the terms of the deal and will update when we receive a response.
Late late update: The Wall Street Journal reports that Google paid $125 million for Zagat, far below $200 million valuation it sought in 2008 and roughly equal to what it was valued in an investment round 11 years ago.
