The internet firm, worth an estimated £2.5 billion, conceded for the first time it is subject to the laws of Scotland and can be taken to court on this side of the Atlantic.
TripAdvisor, following months of legal argument in the case brought by guesthouse owner Richard Gollin, confirmed yesterday at Stornoway Sheriff Court it was dropping a challenge to the jurisdiction argument.
It had earlier emphatically denied it was subject to UK laws and said it could not be sued in Britain, given that its firm is headquartered in Massachusetts and outwith the remit of Scotland's legal system.
Mr Gollin, 64, who runs the six-bedroom Baille na Cille guesthouse at Uig, on the west coast of Lewis, claims that negative criticism posted about his business is false and should be removed by TripAdvisor.
He has alleged the website has hurt business through lost bookings worth around £2000, arguing that it is rife with inaccurate or false guest reviews.
Mr Gollin's lawyer, Duncan Burd, previously argued that the "harmful event" took place in Uig, on Lewis, and thus the Stornoway court had jurisdiction. In addition, he pointed out TripAdvisor had a designated office at 7 Soho Square in Lon-don, which puts "the defenders in the member state."
Sheriff Colin Scott Mackenzie ruled in TripAdvisor's favour over transferring the action to a higher court, which requires Mr Gollin to hire a lawyer and be exposed to unlimited expenses.
The sheriff said the case, which involves contract law, was too complicated for the small claims arena. Mr Gollin, a former college lecturer, told the sheriff that TripAdvisor spent weeks trying to transfer the case to Massachusetts, now it sought a way where they could expose him to unlimited expenses.
Sheriff Colin Scott Mackenzie told Mr Gollin: "I do have sympathy for you."
Remitting the case to the higher civil court, he added: "There are matters of certain difficulties here, potentially."
Mr Gollin is appealing to Sheriff Principal Derek Pyle over that decision, which he later claimed could force him to drop the action given the legal costs involved.
Angus Macdonald, for TripAdvisor, told Sheriff Mackenzie that complicated questions regarding contract law were too complex for the small claims court.
He also argued that people who used the site did so "at their own risk".