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Sep
07
2010
Google-ITA Deal Reinvestigated by Justice Dept. Chilton Tippin

The U.S. Justice department is investigating the Google takeover of airline ticketing software firm ITA Software Inc, to see whether the deal would give Google too much influence over the online travel industry.

The DOJ investigation is at an early stage, but antitrust authorities are looking at whether travel industry rivals would still be able to access ITA’s data and whether Google would unfairly route searchers to its own travel services, according to the Wall Street Journal.

Google bought ITA, a flight information software company, in July for $700 million. ITA is a price aggregation service that has served sites like Kayak, Orbitz and Hotwire for 17 years, but in Google’s hands the software could cut those online travel booking sites out of the deal. Google plans to use the software to display fares, times, dates and flight plans on the actual Google page, so searchers using Google will no longer have to navigate to sites that traditionally provide this information.

DOJ attorneys are in the process of asking travel industry executives if Google could cut off rivals from accessing ITA’s software, the WSJ said, citing sources familiar with the questioning.

In a Google blog post concerning the matter Andrew Silverman, Google’s Senior Product Manager, said the second eyeballing by the DOJ would likely delay the merger, but added that the company was confident that the investigation would close in Google’s favor.

“We’re confident the DOJ will conclude that online travel will remain competitive after this acquisition closes,” he wrote. “In fact, over the past few weeks online travel companies have noted that they have alternatives to ITA’s product.”

Nonetheless, Google controls 63 percent of the American search market, and online booking companies have rolled up their sleeves for a fight. They want to avoid having to pay for their listings to posted alongside Google’s, and since so many people turn to Google for search, preference given by Google to its own travel listings could sound the travel listing companies’ death knell.

In an unrelated but revealing antitrust investigation, Texas attorney general Gregg Abbott, has raised questions about how Google ranks Web sites on the search page. The issue is called search neutrality, and several companies allege that Google unfairly puts their competitors ahead of them.

In response, Google announced that its responsibility is to its users, not to Web sites, and that the company prioritized giving searchers the most relevant and helpful information.

In this light, it is possible that consumers will benefit from Google entering the travel search business. Arthur Frommer, the well known travel expert, points out the massive discrepancies in the current state of travel search. For example, sites like Expedia, Kayak and Orbitz all claim to give unbiased, and holistic travel aggregating services, yet the same inquiry typed into each site yields drastically different fares.

“The current situation is untenable. It needs Google to straighten things out,” Frommer writes.

Still, the main fear is that Google will monopolize the search industry and shake up the travel industry too much in general—by charging airlines to post flights on the main Google page. And although there are alternatives to ITA’s MIT-developed software, it is regarded as the most powerful, and, should Google disallow its competitors to use it, the scale could tilt in Google’s favor to the disadvantage of all.

However, Google has stated that it does not plan to sell airline tickets, whereas the other Web sites do; the search engine is only concerned with optimizing search. Google said they would still drive traffic to other sites for the actual purchasing of tickets.

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