The fear that Google would crush the online travel market with an acquisition of ITA Software has made strange bedfellows of Microsoft, Expedia, Kayak, Travelport and Amadeus.
As Google and ITA Software apparently continue to negotiate over price, a looming antitrust issue and possibly the future of ITA’s airline- reservation system business, shifting alliances have emerged with the goal of keeping ITA Software independent and out of Google’s hands, Boston.com reports.
“Microsoft, Kayak.com, Expedia Inc., Travelport and the European online travel service Amadeus could be part of a new consortium to keep ITA as it is — an independent maker of software used by many companies…,” according to the report.
But, just think of the antitrust issues that would arise in this unlikely mashup of competitors.
The cast of characters include Microsoft, which has the Bing search engine and Bing Travel; metasearch player Kayak; the world’s second largest online travel agency, Expedia; and market-share dominating global distribution systems in Travelport and Amadeus.
If you talk to anyone close to the Google-ITA negotiations, you hear the constant refrain: “There are many moving parts.”
And, the market-dominance fears that a Google-ITA combination have triggered apparently have the parts moving in all kinds of wild and unexpected directions.
Reuters says that Expedia was considering investing nearly $200 million into Kayak — which competes with Expedia.com and TripAdvisor — so that Kayak could buy ITA — despite a lot of overlapping ownership between Kayak and ITA.
A somewhat different version of the story, however, from SiliconRepublic, has Kayak, with financial backing from Expedia, investing $200 million into ITA to enable it to stay independent.
All of this is said to be taking place despite earlier protests by Expedia that it has little to fear from a merger of Google and ITA.
Expedia also has repeatedly claimed of late that while it would be “opportunistic,” huge acquisitions are not on the agenda, although buying smaller media companies with optimum geographies are a possibility.
All of these shifting alliances portend a Wild West atmosphere in the travel industry over the next year.
If Google and ITA ultimately come to terms, there would be months of regulatory scrutiny before closing a deal, giving the above-mentioned companies and others lots of time to maneuver, form new alliances and take other defensive actions.
The enemy of my enemy is my friend, I like it!
The move is a really interesting one for affilaite and resellers as they seem to be the biggest potential losers on this deal. The airlines while rubbing their hands at the idea of having a single larger affiliate to deal with would likely be expecting this would influence them with better search results.
Google is going to have to be careful that what ever product it launches like Bing Travels FareCast platform, that it doesn’t further erode the transperancy of its search results. The problem is the increasing number of Google properties showing in the results make it harder for websites to compete organicailly and have to look to paid options like AdWords.
The bigger problem is that some of these Google properties like Google Maps seem prone to spam, have poor customer support and too much of the automated signup seems prone to errors.
What ever the move if they buy ITA, the market is likely to acceralate its consolidation as i’m sure a number of partners such as Expedia, Amadeus or Microsoft don’t want to ever be caught with their pants down again!