Analysts Mull the Market Meaning of Googles ITA Bid
"Clearly Microsoft's Bing would be discomforted by having to buy their flight data from their biggest competitor," Reynolds said. "Kayak, the people's choice flight aggregator, could face a lights out event, similar to Microsoft's strangling of Netscape in the '90s. Even Expedia and Orbitz could be badly damaged if Google chose to build flight bookings into their search. Look for all these parties to oppose this Google move energetically. "This is another example of Google tying new kinds of services to the virtual monopoly it already exercises in Web search," he added. "Should this acquisition move forward, this administration can be expected to bring it under intense scrutiny immediately.""We think they will spend a fair amount of time going through it trying to understand it both because of the size and the price ... and anything Google does tends to go through [regulatory scrutiny] anyway. We welcome that." Schmidt's comments never rang truer. The last time Google tried to buy a company with a larger influence on a sector, the Federal Trade Commission scrutinized the deal for possible anti-competitive concerns. The FTC eventually cleared Google's $750 million bid for AdMob after speaking with others in the mobile ad market and industry analysts, such as Sterling Market Intelligence analyst Greg Sterling. Given the FTC's embarrassing failure to harness Google in its quest for AdMob, Sterling told eWEEK the deal would incur very intense scrutiny and "there would be a bias against the deal going in from the FTC." Not everyone believes Google will be halted, largely because Google doesn't really have a travel search offering such as Bing Travel or Kayak.com, making the expansion more vertical and less horizontal. Forrester Research analyst Henry Harteveldt said this may make Google's bid easier for regulators to stomach against the concerns of online travel companies. "I wouldn't be surprised if they will be required to commit to making ITA's products available to all who want to continue licensing it, and at commercially acceptable rates (read: no price gouging, and no saying no to Bing Travel if they want to continue using ITA to power Farecast)," he wrote in a blog post July 2. IDC's Reynolds said Google will have to decide whether to leverage its flight data dominance to build a new and better flight booking experience directly into its search experience or whether it is better served to play nice with its major advertising customers, the airlines and the travel services, and continue to hand off travel purchasers to them.
Google's Schmidt acknowledged he expects a "significant" regulatory review of the deal.