Is Yelp a Thorn in Apple’s Side?

Yelp’s integration into Apple Maps demands more investor scrutiny.

Yelp’s (NYSE: YELP) deal with Apple Maps was heralded as big news for investors just a few months ago.  It has since become a further cause for concern for Yelp’s struggling stock.

Apple’s (NASDAQ: AAPL) vulnerability with its problematic map application is undeniable.  All too often, directions are wrong or location data is missing.  Apple’s CEO, Tim Cook, has apologized for the Apple Map’s inadequacies.

It’s increasingly apparent that Yelp’s flaws contribute to Apple Maps’ flaws.  Yelp’s user-sourced business information is leading Apple Map users astray. Apple needs to work more proactively with Yelp for more accurate business listings and review if they hope to fix Maps.

Anyone with a Yelp account can add or influence venue data. This may range from the business’s location to its operational hours – all without independent verification by the business in question.  By comparison, Google (NASDAQ: GOOG) requires business owners to confirm their location.  Google Maps employs a method known as crowdsourcing.

According GigaOM, Yelp’s user-based approach results in “multiple venues entered, prospective businesses that add data but never open, and businesses that are closed but never get removed from Yelp.”  GigaOM cites a very telling example involving a Napa Auto Parts location.  A search of Apple’s Maps found one Napa Auto Parts store in a small California city that had 13 reviews from Yelp users.  However, Apple Maps showed that particular location as a pizzeria and there was no mention of Napa Auto Parts,

Yelp’s approach with hidden reviews and out-of-date businesses will continue to degrade search results and more customer use or map quality improvements wont fix that problem.

Here’s why Yelp’s method of curating posts presents a further problem to Apple Maps.  Yelp favors ‘elite’ user reviews over reviews by regular users.  Elites are specifically selected for their seemingly authentic reviews and profile information.  This means the primary reviews seen by searchers are hand picked by Yelp.  When using a full browser, the filters can be circumnavigated and other reviews by regular users can also be accessed.  But Yelp’s mobile application and Apple Maps do not allow those filtered reviews to be seen.  As a result, much information is missing.  This is likely to become a bigger problem for Yelp, especially if Apple decides to terminate their contract and look for better, more accurate alternatives.

We still see too many negatives outweighing the positives for Yelp.  Refer to our recent overview of Yelp, “Does Yelp Need Help”.  We continue to urge investors to avoid Yelp.  If you’re a current shareholder, sell on a bounce.  With or without Apple Maps, Stocks on Wall Street remains bearish on Yelp.

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