Google July 1 agreed to buy flight information software maker ITA Software for $700 million in cash. Airlines such as Alitalia and US Airways, metasearch engines such as Kayak and Microsoft Bing Travel, and online travel companies such as Orbitz and Hotwire use ITA's QPX program to provide their consumers accurate info about flights. The deal is sure to only intensify the scrutiny the search engine receives from federal regulators concerned the company is growing too large.
Google July 1 agreed to buy flight information software maker ITA
Software for $700 million in cash, a deal that is sure to intensify the
scrutiny the search engine receives from federal regulators concerned the
company is growing too large.
ITA offers airlines, search engines and online travel
companies software that organizes flight information, including flight times,
availability and prices.
Airlines such as Alitalia and US Airways, metasearch
engines such as Kayak and Microsoft Bing Travel, and online travel companies
such as Orbitz and Hotwire use ITA's
to provide their consumers accurate info about flights.
Despite improvements in flight comparison technology,
finding the right flight at the best price can still be a frustrating
experience because pricing and availability change constantly, said Marissa
Mayer, Google's vice president of search products and user experience, in a blog post
Mayer said 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.
Noting that half of all airline tickets are sold online, Google
CEO Eric Schmidt said on a conference call Google will use ITA's technology to
build its own flight search tools to pad Web search that helps users look through
images, newspaper archives, books and geographic data.
On those grounds, the deal appears to be a perfect match.
Google loves smart computer programmers; ITA was founded by computer scientists
from MIT. Google wants to broaden its search efforts to the lucrative online
travel niche; ITA is one of the best in the business at this.
"We think we can... drive more traffic, that is, more
customers, to the airline and online travel agencies' Websites and that
ultimately then will determine fares and availability in a better,
consumer-friendly way," Schmidt said on the call.
However, Google is under tremendous scrutiny by federal
regulation bodies such as the Justice Department and Federal Trade Commission,
which fear the company is becoming the Microsoft of the Web: that is, too
powerful and a threat to other Internet companies.
Schmidt, who acknowledged he expected a "significant"
review of the deal from regulators, promised that Google will honor all
existing agreements in the market.
This suggests that it will not shut off rival
Bing's access to pricing comparison and flight info. Bing uses ITA's QPX software
to power the
flight comparison Website.
Google must also prove that its deal not only won't
affect ITA's current customers, but is good for the online travel market and
for consumers who use the data provided by ITA's software when booking flights
with US Airways, Kayak and Orbitz.
Google argued on a special Website
about the ITA bid that because it does not currently compete against ITA
Software, the deal will not change existing market shares. Translation: the
merger should not affect competition.
Google bid to
mobile display ad provider AdMob for $750 million in November, a deal
in May after months of
whether the deal would restrict competition in the
burgeoning market for mobile online ads.
2010 is half over, so it wouldn't be a shock if the deal didn't
receive regulatory approval until 2011, if it is approved at all.