Google acquires Zagat

Google has acquired Zagat, one of the most well-known names in restaurant reviews. Zagat is best known for its small guidebooks that offer reviews and recommendations on restaurants around the world. Terms of the deal weren’t disclosed.

• Terms of the deal were not disclosed, but people briefed on the matter said that Google had paid $100 million to $200 million. Tim and Nina Zagat, who began the company by compiling restaurant ratings from friends into slim surveys more than three decades ago, will remain with the business.

• The deal will most likely mean a lucrative payout for the Zagats, as well as for the private equity firm General Atlantic, which bought a third of the company in 2000. But it also raises questions about how Google will integrate Zagat, whose main offerings include its popular paper guidebooks and a paid subscription Web site.

• Local online advertising is an increasingly lucrative market, one that analysts estimate to be about $140 billion a year. Google estimates that about 20 percent of its daily searches are for things that are nearby, and that percentage is even higher for queries made on mobile phones.
• Two years ago, Google tried — and failed — to buy Yelp, Zagat’s biggest online competitor, for $500 million. Last year, Google introduced Places, a Yelp-like service for listing local businesses and collecting consumer reviews. But the service has not collected the same volume of reviews as Yelp and others.

Zagat was founded back in 1979, and, according to the company, now includes ratings and reviews submitted by 350,000 ‘surveyors’ — its own consumers submit content for use in future guidebooks. In recent years the company has moved its reviews online as well, and it offers mobile applications for the top smartphone platforms. Much of their online content was locked behind a paywall for some time, but Zagat relaunched its website in Feburary to include far more free content.

In 2008 Zagat reportedly put itself up for sale with an asking price of around $200 million, but subsequently took itself off the market.

The move is part of Google’s mission to improve its local products, which are now run by Google VP Marissa Mayer. Mayer has long been one of the most public faces at the company, and was head of Search for a decade.

Tim and Nina Zagat, who began their restaurant ratings more than three decades ago, will remain with the business.

Google had previously been in talks to acquire Yelp in late 2009, but those discussions fell apart and Yelp walked away from some $500 million. Since then, the relationship between Google and Yelp has been tenuous, as Google borrowed liberally from Yelp’s database of reviews to flesh out its Google Places pages. Google has toned down the practice in the last few months, and is now clearly looking to boost the number of reviews it can call its own using features like Hotpot and through deals.