Anyone reading comments from Google and listening to a press conference convened by FairSearch could be forgiven for thinking today was just a huge online travel love-in.
Members of FairSearch, the coalition of travel and tech companies created to oppose the Google’s acquisition of ITA Software, appeared to struggle to contain their glee after winning what they believes are major concessions to the deal.
Meanwhile, in a blog post, Jeff Huber, senior vice president for commerce and local at Google, could also barely stop himself from metaphorically breaking out the champagne (“Up, up and away!”).
Huber should’ve just headed down to DC and joined the FairSearchers included in the press conference for a toast to the Department of Justice, such was the apparent joy being experienced by everyone involved.
But those watching events as they unfolded over the past nine months, as lobbyists, friendly senators and sources on both sides worked feverishly to influence media opinion or halt, radically alter or push the deal through unscathed, might now be scratching their heads as to why everyone appears so happy.
Tom Barnett (counsel to Expedia), Patrick Lynch (former attorney general) and Robert Birge (chief marketing officer at Kayak), all speaking on behalf of the FairSearch group, were quick to praise the Department of Justice for producing “a clear win for consumers and competition in the marketplace”.
The concessions obtained as part of the settlement were a victory for those concerned that the deal in its original form would have violated antitrust laws.
Google’s new competitors in the travel industry (yes, they can be called that now), which are existing ITA customers (such as Kayak, Microsoft’s Bing), will continue to have access to the famed QPX technology, a commitment to research, commercial data protection and a mechanism to enforce oversight if Google is deemed to be in breach of the conditions.
These were important contractual problems seemingly now resolved.
Speaking after the FairSearch press conference, Birge said the outcome has forced Google to renege on some key issues which emerged since the deal was first announced in July 2010.
“We asked Google in a normal business context for assurances that we’d continue to have access to QPX and the on-going upgrades to QPX, and that they would protect our proprietary usage of ITA that’s based on our own patent-pending technology. They simply said no. This idea that they said that they would ‘honor all existing agreements’ was further spin – I could have reworded that as: ‘We are legally obligated to honor the legally-binding contracts that existing licensees hold, but we reserve the right to shut them off once their contracts have expired’.”
FairSearch members appear to have got what they wanted.
Now look at it all from the other side. The problems many had with the acquisition seemed to focus primarily on two issues – contractual and so-called search discrimination.
It is worth noting that the concessions Google has made in order to get the deal passed by the authorities are almost exclusively around contractual problems, rather than search discrimination.
The DoJ appears to have pretty much given Google a free pass here on the latter. In fact, so-called search discrimination is, in some respects, just another phrase for “don’t like having a competitor” – something that the DoJ could hardly rule against.
And this, now that the deal is approved and Google gears up to start playing with its prized asset, is at the heart of the issue.
Members of FairSearch get their contractual concessions, but Google – despite having to be nice to ITA’s existing customers until 2016 – still gets what it REALLY wanted: the chance to become a enormous force in a search vertical.
That rather lucrative vertical called travel search. So which team really won?
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I would say Google indeed won.
I would say it is a pretty clear win for Google. Google is free to form a competitive product in the flight metasearch area and may also internally develop functionalities on top the QPX product (or other ITA products) which is not part of the license.
In other words, they are completely free to dive into the online travel vertical, which will be a great technology push.
Fairsearch’s stated goal was to derail the acquisition – that was simply not accomplished. I believe that goal never was realistic given the context of the Google/ITA merger.
Interestingly the settlement includes giving current customers access to ITA’s ‘instant search’ product currently under development (http://www.wired.com/epicenter/2011/04/google-ita/) at ITA. This I believe is the major score for fairsearch.
With this exception, I agree with Johannes – Google got what it wanted.
I think there’s some lessons to be learnt for Google by the way they made their initial announcement – it was fairly brief and contained little information on what their intentions were [it did contain a nice market positioning slide that Kevin likes to post though
] It’s probable that they would’ve had their hands tied to some degree as a public-traded company, but they could have pre-empted a backlash (particularly from online businesses that are over-reliant on traffic from Google searches) and done more at the start to address it. I’m not suggesting that the Fairsearch initiative would not have happened, but rather it was a lot easier for Fairsearch to gain momentum.
What happened after the initial announcement was that other parties were able to control the narrative, which lead down all sorts of paths. Google were then on the back foot, and were forced to explain more about their intentions (and probably conceded more than they would have wanted on the contract negotiations) and have been making manoeuvres behind the scenes.
As an aside, it will be interesting to see the organisational changes that must be about to take place.
It’s a win for QPX competitors.
An open announcement that they have only 4 years left to find something else and migrate. 4 years, with the large technology platforms operated by OTAs and airlines, is nothing. The RFPs should go out tomorrow.
Google wins. The acquisition has been approved and they have been given the green light. This will lead to future reinterpretations of the DoJ restrictions. Meanwhile, Google plunges headlong into the travel vertical.
Alas, Goliath trumps David.
This post is classic Tnooz. Love it.
@sean – not sure if that’s a compliment?!?
It’s a compliment. But I’m trying to act more English so I can fit in as an ex-pat. So, I’m glad you couldn’t quite tell if I was being complimentary.