Facebook FB has introduced yet another feature and this time it is Yelp Inc. YELP that went tumbling down. The social media giant has started testing a service called Facebook Professional Services for providing local reviews, which is direct competition for Yelp’s offerings.
The news has already come as a blow to Yelp investors as can be seen from its more than 9% plunge in yesterday’s trading session.
Facebook had introduced this feature last month and within a short span of time it has started getting popular with reviews for diverse services pouring in. Facebook Professional Services allows local businesses to create their pages while users can post and get reviews. The feature is catching up fast given Facebook’s massive user base.
All a user has to do is to search for the service they want and Facebook will come up with all the available options along with reviews and ratings. Facebook has already made this feature available for a wide range of service providers including pet breeders, automotive repair shops, wedding planners and even accountants among others. The only domain that has not been touched by Facebook is restaurant reviews.
So far, Yelp was the first option for people to get reviews about professionals. However, with this initiative, Facebook might be able to steal a fair share of Yelp’s business. On Facebook, people will have to post reviews from their valid user accounts unlike Yelp where most people post reviews anonymously. This will add to its credibility as a user is more likely to trust a review by a known person on his network instead of strangers.
This move makes sense for the company as it has already been taking steps to become more useful to its users. It will also expand and diversify its revenue base in the process. This October, Facebook collaborated with the startup Pro.com to roll out a messaging service – Text-a-Pro (as part of its Messenger), which allowed homeowners to find capable handymen for major as well as minor jobs.
While this is another positive for Facebook, it could be a major blow to Yelp which has been affected by its inability to drive sufficient user growth and the closure of its brand advertising business. Moreover, Yelp is facing a hard time owing to Alphabet’s GOOGL ability to divert search traffic toward Google reviews.
Another company which might also be affected by Facebook’s professional services reviews is Angie's List, Inc. ANGI. However, it has not registered any negative share price movement so far.
Facebook currently has a Zacks Rank #2 (Buy).
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