Week+03+(Sept+19+-+23)

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 * Expectations.At this point in class you should have completed or showed me: **
 * 1) ** Article Summary: read an article based on Marketing and present the article (we presented in class last week). All were expected to hand in the article and summary. **
 * 2) ** Respond to the article/video we discussed in class on Zagat and respond to the three questions on the wiki – include your name in the comment post (see discussion above). **
 * 3) Form a group and start project in book (page 36). With this project you will complete a paper and PowerPoint. Market a Sports Drink project
 * 4) == Friday: examination on Chapter 1 and 2. ==
 * 5) Guest speakers = BONUS points.

WEEKLY ARTICLE:
Read article (and watch video, if available) and answer the questions in the discussion section (discussion tab above). Make sure you include your name at the top. Articles are considered later after 5:00 p.m. on Friday.

**Zagat Deal Extends Google's Influence** Video Google bought restaurant-review company Zagat, thrusting the Internet giant into the new roles of content creator and print publisher as it seeks to attract more advertising dollars from local businesses.
 * SUMMARY: **
 * ARTICLE: **

‍By [|AMIR EFRATI]
Google is buying restaurant-review firm Zagat, bailing out the company's founders who had tried and failed to sell out.

[|Google] Inc. bought restaurant-review company Zagat Survey LLC, thrusting the Internet giant into the new roles of content creator and print publisher as it seeks to attract more advertising dollars from local businesses.

Google didn't disclose the price it paid for New York-based Zagat, whose pocket-sized maroon books rate restaurants, hotels and other local attractions with the help of 350,000 contributors world-wide. Zagat, which has a relatively small online presence, has been called "the gastronomic bible."

The deal comes at a time when Google—and its ambitions to capture more local-business ads—are under scrutiny by federal antitrust authorities, who are looking into allegations that the company undermines online-review sites such as Yelp.com by directing its search-engine users to specialized Google Places pages that provide information and reviews on local businesses.

Google has denied any anticompetitive practices and has repeatedly said it creates its services to benefit users, rather than other websites. A Yelp Inc. spokeswoman declined to comment Thursday.

In an interview, Marissa Mayer, a Google vice president, and Zagat co-founders Nina and [|Tim Zagat] said they planned to continue publishing the Zagat books for now and that the company's reviews from more than 100 countries would be integrated with the business listings of Google Maps and Google Places. Google has said more than 20% of all searches on its site are related to local businesses.

The acquisition fits squarely into one of Google's top priorities under Chief Executive [|Larry Page]: providing people with information about local businesses, including ratings and reviews.

Zagat announced the Google purchase on their Web site. Google, based in Mountain View, Calif., is trying to make money by getting local businesses to spend money on Web ads—its main source of revenue—or offer special discounts to Google's users via Google Offers, among other things. The company tried to buy Yelp in 2009, but the deal fell through, people familiar with the matter have said.

Though Google has been on an acquisition spree, picking up many small technology and online-advertising companies over the years, it rarely has purchased other well-known consumer brands, let alone companies that publish their own content. Last month it agreed to buy cellphone maker [|Motorola Mobility Holdings] Inc. for $12.5 billion, and in 2006 it paid $1.65 billion for the YouTube website, the top brand in online video.

Earlier this year it bought Next New Networks, which produced online video content for YouTube, but the company's employees were brought in mainly to guide aspiring YouTube content creators.

In recent weeks, Google has expressed interest in buying video site Hulu LLC, which would include rights to television and movie content, people familiar with the matter have said.

"Consumers care about reviews and reviews influence purchasing," so Google "wants to be the marketplace" of reviews, said Greg Sterling, senior analyst at Opus Research, an Internet market-research firm.

The Zagat acquisition also helps fill a gap in Google's business listings, Mr. Sterling said. On Google Places pages, Google recently removed snippets of reviews that were taken from other websites like Yelp and TripAdvisor after those sites alleged Google was "stealing" their reviews. The Federal Trade Commission, which is conducting a broad antitrust probe of Google but hasn't accused it of any wrongdoing, had been looking at that issue, among others, people familiar with the matter have said.

Though Google has been increasingly successful in getting its own users to post local-business reviews, the removal of the outside reviews left its business listings with less information.

Mr. and Mrs. Zagat, who started their company in 1979, will be joining Google and said they expected to remain at the company for a period of years. The couple had looked to sell the business in 2008 but gave up after five months, citing the fragile economy. Ms. Mayer said she began speaking to them about an acquisition in March of this year.

When asked whether Google would use Zagat's famous 30-point rating scale on its own Web pages, Ms. Mayer implied it would, saying the rating system "works, people understand it, and it's one of the things that's attractive" about Zagat.

With the deal, Google picks up Zagat's 120 New York-based employees and could benefit from its relationship with hundreds of thousands of reviewers, who fill out surveys for the company in exchange for free Zagat books or subscriptions to reviews on its website. Google could also leverage the direct relationships Zagat has with thousands of local businesses.

Zagat's publishing arm is relatively large; the company has said its New York City guide to restaurants sells more than 600,000 copies a year. Its website, which gets a small amount of traffic compared with Yelp and others rivals, has a partnership with OpenTable.com to help visitors make restaurants reservations.

Ms. Mayer said that partnership "is a healthy one and one we're interested in continuing." Still, [|OpenTable] Inc.'s shares were down 8.3% at $57.50 Thursday in 4 p.m. trading on the Nasdaq Stock Market.

Private-equity firm General Atlantic, an investor in Zagat, said in a statement that it was "pleased" with its involvement in Zagat. A spokesman said the firm views Zagat as "having been a good investment," but declined to comment on the purchase price. Zagat previously said it was valued at $125 million in an investment round in 2000. —Shira Ovide contributed to this article.

1. What is Google's motivation in acquiring Zagat? 2. If Google acquires Zagat, does Google have an incentive to steer those searching for restaurants on its site to Zagat? Be careful: Suppose Urban Spoon or Yelp provides better reviews. How would Google's steering consumers to Zagat affect the willingness of searchers to use Google? 3. What is the possible antitrust violation of Google's acquisition of Zagat? That is, why would Google's acquisition of Zagat possibly be anticompetitive in the restaurant information market?
 * QUESTIONS: **