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Although a purchase of local community Web powerhouse Yelp would have let Google (GOOG) instantly become a repository of local web habits and usage -- a nut it hasn't yet cracked -- the deal apparently won't happen.
Yelp's founder reportedly walked away from a $500 million deal with Google, signaling that there is more money to be made elsewhere, or that he sees other partnerships as the answer, not a sellout to Google.
Google has muscled its way into so many areas of the Internet. Is it trying to become what Yahoo! (YHOO) was back in the day? That is, a chat and guide resource for all things local, like restaurants, schools, businesses, services and nightclubs? If you know Yelp, it goes pretty far beyond that -- and that is why Google wanted it. Talk about highly relevant advertising to an extremely receptive audience. It was going to be an advertising mecca for Google.
No dice, though. Google needed Yelp way more than Yelp needed Google. Local is the last, best area for Internet business growth that's incredibly meaningful, and even though Google would not have improved Yelp's positioning much by buying it, integrating its phenomenally successful results across its broad array of properties and bringing in tons of relevant and local ad dollars would have made the $500-$550 million price tag worth it, even in the short term.
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