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The Yelp CEO Response to the Yelp Lawsuit

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By Minara El-Rahman on March 05, 2010 10:15 AM

As we wrote about previously in this blog, there is a Yelp lawsuit claiming that Yelp is involved in unfair business practices, running an "extortion scheme," and having Yelp employees call businesses in order to have them pay Yelp monthly in order to remove or adjust negative reviews about their business.

In response to these allegations, the Yelp CEO has posted his take on the lawsuit on the Yelp official blog. Here is his first response to the lawsuit filed by the veterinary hospital in Long Beach, California. In his first response, the Yelp CEO calls the lawsuit "to be without merit" because it is based on a "conspiracy theory."

While the Yelp CEO may call the allegations of this lawsuit part of a conspiracy theory, there are a lot of small business owners who claim that Yelp sometimes manipulates the reviews that go up. It is important to note that these are allegations versus actual facts.

In his blog post, the Yelp CEO tries to clear up what many small business owners view as an unclear business model at Yelp. He writes: "Advertising and content on Yelp is like the separation of Church and State: with the exception of a single review at the top of their review list (clearly marked as such), advertisers gain no control over how reviews appear on their business page."

He explains that Yelp's sales department can not suppress good reviews or write bad ones about businesses that do not choose to advertise on Yelp. He claims that reviews are checked over by an automated algorithm that helps filter the reviews. This means that some reviews that are legitimate may be suppressed from business pages.

As a result, small business owners may have positive reviews appear on their page only to have them removed by this automated system in place by Yelp. While this is just a blog response, it remains to be seen what will happen with this new Yelp lawsuit.

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