Google Purchase of ITA Merits Antitrust Concern but Should Pass

 
 
By Clint Boulton  |  Posted 2010-07-03 Email Print this article Print
 
 
 
 
 
 
 

Google's $700 million bid for ITA Software July 1 is sure to attract regulatory scrutiny because of the size of the deal and growing concerns about the search engine's sway over the Web. Some believe Google could use its power to ding ITA customers Microsoft Bing, Kayak.com, Expedia and Orbitz. Others believe Google could use its strength in search to shuttle travel traffic to its own offering or gouge ITA's existing software licensees in prices. However, some experts say the deal should ultimately pass muster because it represents the search engine's expansion into a new vertical.

Google's $700 million bid for flight information software giant ITA Software July 1 is sure to attract regulatory scrutiny because of the size of the deal and growing concerns about the search engine's sway over the Web.

Some believe Google could use its power to ding those that use ITA's data, such as search engines Microsoft Bing and Kayak.com and online travel companies Expedia and Orbitz. Others believe Google could use its strength in search to shuttle travel searchers to its own offering or jack up fees for ITA's existing software licensees.

However, some experts believe the deal should ultimately pass muster because it represents the search engine's expansion into a new search vertical and the company has already promised to support ITA's existing customer agreements.

ITA sells airlines, search engines and online travel companies software that organizes flight information, including flight times, availability and prices. Once integrated on Websites, QPX allows consumers to compare flight times and prices, two key factors in hunting for airfare.

Google currently dumps information about local businesses and products into its search results, but doesn't integrate flight information into its results. Google will use ITA's technology to build new flight search tools that will make it easier for users to search for flights, compare flight options and prices, and shuttle users to a site to purchase tickets.  

Google CEO Eric Schmidt promised that Google will honor all of ITA's existing agreements with airlines, search engines and travel companies. This is crucial because it will not shut off rival Bing's access to pricing comparison and flight info. Bing uses ITA's QPX software to power the Bing Travel flight comparison Website.

Microsoft, which at 10 percent finds itself struggling to crack Google's 65 percent market share, declined to comment on whether it is concerned about Google's bid.

Orbit spokesperson Brian Hoyt told eWEEK that Orbitz isn't concerned so long as the Federal Trade Commission conducts proper due diligence in gauging the impact of a Google-ITA merger on the online travel market.

However, Kayak, which uses ITA's data to help consumers find flights in its travel search engine, was so concerned about Google's bid that Reuters said it offered to buy ITA to keep the company out of Google's hands. Expedia, TravelPort and others were also rumored to have bid for ITA.

In a discussion with Reuters leading up to the buy, Kayak CMO Robert Birge said: "We are going to watch the potential to abuse dominance. They have dominance on the general search side. When you couple that with ITA's airline relationships, there is reason to be concerned."

Indeed, IDC analyst Hadley Reynolds told eWEEK ITA has built an unassailable position by creating the best and most comprehensive database about air travel and that Google would gain instant dominance of the online flight information industry if its bid comes to pass. He believes ITA's customers have reason to be nervous.



 
 
 
 
 
 
 
 
 
 
 

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