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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