Earlier this month, Google Inc. (NASDAQ:GOOG) was rumored to be making an acquisition deal with Yelp.com. Google was willing to pay about $550 million, but now there are reports surfacing that Yelp has turned down the acquisition offer. This is surprising considering that Yelp has a reputation for bullying local businesses over negative reviews.

Yelp raised a total of $31 million from VC firms and is going to earn roughly $30-$50 million in revenue this year. This places the company at a valuation of $200 million, another reason why turning down $550 million from Google seems like an illogical move.

Why would Yelp turn Google down? Clearly Yelp believes that they could grow at a faster pace as an independent company. If the company made roughly $50 million in 2009, then I would not be surprised if they make at least $75 million in 2010.

Google (NASDAQ:GOOG) and Yelp are rumored to be in advanced acquisition negotiations according to a source with TechCrunch. The source reports that the deal could be worth over $500 million. Yelp is a local business review website that has become very popular since starting in 2004. Yelp receives about 9 million monthly unique visitors (comScore). However Yelp reports themselves that they receive 25 million monthly unique visitors.

Yelp’s annual revenues is roughly $30-$50 million. The company raised $31 million from venture capital firms, spread out in about four rounds of funding. Based on the venture capital investment, Yelp’s valuation is around $200 million. There is about an 80% chance that the deal will go through.

Yelp is now available on the Google Inc. (NASDAQ:GOOG) Android Market. Yelp has already had applications on the iPhone and BlackBerry for quite some time now. The Yelp Android application has restaurants, navigation, reviews, photos, and direct calling. However the the reviews are currently read-only which means that you cannot leave reviews while you’re on-the-go with your Android device.

A man complained left a negative review on Yelp about a bookstore. The bookstore owner tracked the guy down on Yelp and actually broke into the person’s house. The man whose house got broken into filed a complaint to the police and updated the Yelp review. The reviewer is known as Sean C and the bookstore owner is known as Diane G.

Sean C uploaded photos on Flickr that shows Diane G negatively responding to Sean C through Yelp messages. After the screenshots were produced, a Yelp administrator decided that he or she would lend Sean a helping hand. The bookstore owner was eventually arrested and was given a restraining order against Sean C.

Yelp is currently one of the leaders on listing reviews for restaurants and bars. However MySpace and IAC/InterActiveCorp are partnering to challenge Yelp directly using the millions of users already signed up with MySpace.

Soon MySpace users will be able to look up the addresses and phone numbers of local restaurants and post comments about what they think about those places. The directory of the businesses will be provided by Citysearch.com, a company owned by IAC/InterActiveCorp.

In terms of the user interface, the MySpace/Citysearch combo looks very similar to Yelp’s. There is basic information of the business and it is followed by the comments from MySpace users. MySpace and Citysearch will sell ads to local businesses placed along the reviews. So far Coors and Outback Steakhouse have signed up as the pilot advertisers.

[via Forbes]

Yvonne Wong, a dentist in California is suing a husband and wife that left her a negative review on Yelp.  Judge William Elfving of the Santa Clara County Superior Court allowed Wong to continue pursuing the lawsuit after the couple.  The judge ruled that Wong had shown a “a probability of success on the merits.”  The couple that left the negative review are Tai Jing and Jia Ma.

However the couple may appeal the decision that Elfving made.

Wong believes that she was defamed by the complaint on Yelp about the treatment of their son.  The couple’s son was treated by the dentist when he was 4 years old and he felt lightheaded after receiving a dose of laughing gas and received a filling with mercury contained in it.  Wong stated that the complaint on Yelp left her emotional distress.

Wong was previously considering suing Yelp directly, but the review website is protected by the Communications Decency Act.  The comments left by the site are not the responsibility of the website itself.

This isn’t the first case where a doctor decided to sue a former patient for leaving a negative review on Yelp.  This past January, Dr. Steven Biegel filed a lawsuit against Christopher Norberg.  Norberg left Biegel a negative review because he felt his bill was too unfair.

The moral of the story here is that if you leave a doctor a negative review on Yelp, take extreme precaution.  Try to avoid making extremely harsh claims and make sure that the review is politically correct.

[via MediaPost]

East Bay Express is reporting an interesting story about Yelp.  Yelp is supposedly offering businesses a way to have negative reviews deleted from their website for a monthly price.  “Hi, this is Mike from Yelp,” stated a Yelp representative. “You’ve had three hundred visitors to your site this month. You’ve had a really good response. But you have a few bad ones at the top. I could do something about those.”

John, the owner of the restaurant that was called by Yelp said that he was not used to getting phone calls like these.  He was familiar with Yelp, but did not expect them to charge a monthly fee to have negative reviews removed. John’s restaurant has over 100 reviews and has about a 3.5 star rating on Yelp.

John had asked Mike, the Yelp rep what they could do about removing the bad reviews.  “We can move them. Well, for $299 a month.”

“When you do get a call from Yelp, and you go to the site, it looks like they have been moved,” stated John. “You don’t know if they happen to be at the top legitimately or if the rep moved them to the top. You don’t even know if this is someone who legitimately doesn’t like your restaurant. … Almost all the time when they call you, the bad ones will be at the top.”

John’s company isn’t the only one.  East Bay Express also reported that over dozens of businesses have reported the same thing is happening with them too.  Some businesses even believe that Yelp representatives themselves are writing the negative reviews.

These are extremely shady tactics and if these stories are true, Yelp is a disgrace to Web 2.0.  You figure Yelp would have a better monetization strategy given their $31 million in funding.

[via East Bay Express]

Christopher Norberg had a car accident in 2006.  So he went to see chiropractor Dr. Steven Biegel. After being treated, Norberg felt that his bill was unfair so he posted a negative review of the Doc on Yelp.com.  Yelp.com is a review website that includes everything from local restaurants to individual professions.

Dr. Biegel claimed that Norberg’s review was libel and caused his business “loss of reputation, shame, mortification, and hurt feelings” and “injury to his business and profession.”  The filing was made in the Superior Court of California, County of San Francisco.  Biegel also believes that Yelp invaded his right to privacy.

As soon as I read this article on PC World, I thought about whether The First Amendment would protect Norberg in this case.  The First Amendment states:
“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

In the case of Gertz v. Robert Welch, Inc. 418 U.S. 323 (1974), The Supreme Court ruled that opinions could not be considered defamatory.  In the case of Yelp, it is clearly an opinionated website.    Personally I believe that the Doc doesn’t have much of a case here.  Just imagine all the negative comments everyone gets on every single YouTube video.  Sometimes you just have to suck it up and have thicker skin when it comes to what people say about you on the Internet.

[via PC World]