Facebook Debuts Graph Search, Could Rival Yelp

by , Jan 16, 2013, 4:55 PM
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Yelp-BGiven Facebook’s massive presence, it could take weeks for analysts to glean all the implications of the company’s new social search offering, Graph Search, which lets users search the social graph for people, pictures, and places -- including local businesses -- and various interests.
 
In particular, Web watchers are wondering how Graph Search will impact Yelp, which specializes in local business listings and reviews.
 
On Tuesday -- the day Graph Search made its public debut -- Yelp shares were down by about 6%. Some analysts, however, said it was too early to call the new service a clear Yelp killer.
 
JPMorgan analyst Kaizad Gotla, for one, thinks Yelp can hold its own against Facebook and Graph Search.
 
“While we think Graph Search is likely to become more competitive with Yelp as Facebook aggregates more local review/rating information over time, we don’t believe Facebook currently offers Yelp’s depth of review content to make Graph Search a replacement for Yelp at this point,” Gotla explained in a research note.
 
“Yelp has the content advantage for now,” Gotla added. “We trialed Graph Search and found that while the product could become a meaningful way to search for local businesses over time, there wasn’t enough user-generated content (check-ins, Likes, etc.) within a person's network to make the results meaningful in certain categories.”
 
“In addition to relatively little Facebook user activity in some categories, we also note that several local business pages on Facebook don't appear to have the depth of photos and other user-generated content that Yelp does and we think it may be challenging for Facebook to quickly ramp this information...,” according to Gotla.
 
The fact is, however, that Graph Search is only days old, and Facebook is still working to index all the connections in the social graph.
 
A more thorough indexing along with a successful mobile service will be critical to Graph Search’s long-term success, Gotla said, noting that it should become more competitive with Yelp and TripAdvisor over time.

 

 

 

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