Yelp Is Getting Hammered By Facebook's New Search Announcement

Facebook just unveiled a new search function that people can use to search for all kinds of things, including locations and interests.

That includes local businesses like restaurants and dentists, Facebook engineer Lars Rasmussen said at the search-product unveiling today at Facebook's headquarters.

That's spooked Yelp investors, who have sent the stock down 7.75 percent today.

This is a very interesting battle. Yelp has roughly 80 million active users, a fraction of Facebook's audience, and has only recently started to expand internationally, where Facebook is strong.

But Yelp has an advantage over Facebook in having far more detailed, structured reviews of businesses—information that lets you search for "burrito" and find a nearby taqueria, because a Yelp user mentioned a "burrito" in his review of the location.

Facebook has a far more developed list of social connections it can use to suggest relevant businesses to users—but to date, it has gathered far less information about those businesses, such as what's on a restaurant's menu or what services a doctor offers.

Yelp CEO Jeremy Stoppelman has long been guarded about embracing Facebook, though more recently the site has embraced Facebook logins and friend lists. Looks like he was wise to be cautious.

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