U.S. Senator Kohl Urges DOJ Review of Google ITA Bid
It's getting harder and harder for Google to do a big deal in the wake of its $750 million consummation of mobile ad maker AdMob.
Against the backdrop of concerns that Google could buy Groupon for $5 billion or so, a U.S. Senator is asking the Justice Department to carefully scrutinize Google's bid to buy travel software maker ITA Software for $700 million.
Senator Herb Kohl said in this Dec. 1 letter to Assistant Attorney General Christine Varney, who leads the DOJ's antitrust division that consumers could lose the "benefits of a robustly competitive online air travel market" if Google buys ITA and launch its own online travel agent or metasearch services.
These online travel agents fear Google will stomp them out by denying them access to the critical ITA data they rely on so much, or charging exorbitant fees to use it, as Kohl noted:
Participants in the on-line travel industry are concerned that Google could refuse to make the key components of ITA software available on reasonable terms to other online travel industry participants by raising the price for a renewed license or refusing to license improvements to the software. Such a course of action, they argue, could effectively degrade competition among air travel search providers and Google could drive more consumers to its own online air travel search services, in the long run harming competition in that market. As a result, consumers would suffer harm if there is less price transparency from competing air travel search providers, which would harm consumers' ability to obtain the lowest airfares.
Google said it wouldn't do this, and while in a perfect world it would great if we could trust official statements from public companies, don't take Google's word on it.
Google wouldn't squeeze out these providers because it knows it will get sued into the ground over it by the DOJ and the smaller vendors.
Just look what's happening with the European Commission, which is mounting an antitrust case versus Google on the basis that three companies said Google is pushing down results for their Websites in favor of its own.
What Google wants to do is use the ITA search data to surface airline flight and fare results on its core search engine.
It's not looking to spin off a separate search vertical the way it did with Boutiques.com for soft goods shopping. At least, it shouldn't think of doing this.
Yet that's another concern Kohl outlines: that Google will pump up its own travel search results over those of Expedia, Kayak and others in FairSearch.
I'm not arguing with Kohl, who claimed he isn't siding with either Google or FairSearch in the "legality of this acquisition under the antitrust laws."
The deal does merit scrutiny for sure. Fortunately, for Kohl and these other parties, the DOJ is already doing this.
The agency launched a second request for info from Google in August. That's the DOJ basically saying:" we're unofficially investigating your bid, so sit tight."
But this deal should pass. I wouldn't mind seeing flight search results on Google.com the way Bing Travel users can on that Website.
What's going to happen, with all of this opposition in Europe and in the U.S., is that smaller companies will successfully stunt Google's growth through attrition.
So many complaints will add up, Google will win some and lose some, and move on to the next battlefront.
Against this opposition, I don't see how Google could even think it could get Groupon, which would help it ostensibly own the local deals market Facebook, Yahoo, Twitter, Amazon, eBay and others are trying to find footing in.
In any event, Kohl's letter bears reading because it provides good context on the online travel industry, but you can also get the gist with this fun video from FairSearch: