How Bad is Facebook Search for Yelp?

Yelp’s (NYSE:YELP) Graph-Search hangover continued on Wednesday, with shares falling as much as 3 percent in the afternoon before recovering to about $20. The online review platform closed down 6.19 percent on Tuesday following Facebook’s (NASDAQ:FB) announcement that it is building a social search tool.

Why is Facebook’s search bad for Yelp?

At a glance, it’s easy to call both Facebook’s Graph Search and Yelp recommendation tools. For example, both allow users to find things like restaurants that their friends like, or to find events that their friends are attending, or make new connections by discovering what their friends interests are. There are even options to search through degrees of removal, such as friends of friends, or in Yelp’s case, total strangers who just happen to live in your area.

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Both depend on crowd-sourced information, as well. Searching for a restaurant on Yelp that has no reviews won’t yield much useful information. Trying to find a good restaurant on Facebook based on what your friends like is no good if none of your friends “like” the restaurants they go to…