Does Yelp "extort" money from businesses?

Question

I have seen numerous articles claiming that Yelp extorts money from businesses by purportedly hiding higher review to drop a restaurant/business's ratings, then offering them the choice to pay money to get reviews "back".

Is there any substantiated claim to prove that Yelp does extort? I will admit, I am a bit skeptical of this kind of claim.

From the first link:

The lawsuit essentially alleges that the heavily funded startup runs an “extortion scheme” and has “unscrupulous sales practices” in place to generate revenue, in which the company’s employees call businesses demanding monthly payments in the guise of advertising contracts, in exchange for removing or modifying negative reviews.

From the second link:

Such tactics may be legal, but they clearly raise ethical concerns. Yelp touts its web site as consisting of "real people" writing "real reviews." The allegations of business owners who have tangled with the company suggest otherwise.

References: [1], [2]

Answer 1

Yelp itself attempts to refute extortion claims in three ways:

First, they cite an independent study by researchers at Boston University and the Harvard Business School, finding that advertisers were no more likely than non-advertisers to have unfavorable reviews hidden. Note that the focus of the study was predictors of fraudulent reviews, but they did address the extortion hypothesis, as shown in this excerpt.

This is a persuasive statistical argument, but of course it relies on Yelp providing honest data on which reviews were hidden in the first place. If they deleted positive reviews of non-advertisers or excluded them from the subsection that supposedly shows questionable reviews, this analysis would not be able to detect that.

Second, Yelp points out that the extortion claims have not held up in court. I haven't evaluated this claim one way or another (for example, if some of the lawsuits led to undisclosed settlements those wouldn't prove anything).

Third, Yelp invites readers to use google to search for poor reviews of yelp advertisers. They ask, "if these Yelp advertisers get a special “Delete” button for negative reviews, why in the world aren’t they using it?"

This does provide evidence that there's not a literal, unlimited "delete this review" option provided to advertisers, but of course there could be more subtle, statistical bias. More importantly, it addresses whether they show honest results for advertisers -- not your specific question about whether they show honest results for non-advertisers.

Overall, I would say that Yelp offers some suggestive but not decisive evidence against the extortion hypothesis, some of which comes from (very likely) unbiased research studies. Probably the strongest evidence either way would come from interviewing business owners who are offered advertising on Yelp, but I'm not aware of any systematic data on this.