The potentially industry game-changing acquisition of ITA Software by Google has been given the thumbs-up by the Department of Justice in the US.
But the acceptance of the $700 million deal has come at a price – a series of conditions imposed on Google by the DoJ to ensure existing ITA Software customers are given access to the company’s QPX software.
The announcement follows nine months of investigation by government officials, open and backchannel lobbying by those for and against the deal, the creation of anti-deal FairSearch coalition, and reams of speculation as to what Google will do its new prized asset.
In a lengthy ruling, DoJ officials say the acquisition, as originally proposed, would have “substantially lessened competition among providers of comparative flight search websites in the United States, resulting in reduced choice and less innovation for consumers”.
The DoJ has today filed a civil antitrust lawsuit in the US District Court in Washington to block the proposed acquisition – but has offered at the same time a proposed settlement that would resolve “competitive concerns”.
The settlement will include the following:
- Google will be required to license QPX software to airfare websites on commercially reasonable terms.
- Google will be required to continue to fund research and develop the product “at least” at similar levels to what ITA had invested.
- Google will be required to develop and offer ITA’s InstaSearch product to other travel websites.
The DoJ says it will also seek to impose a number of other conditions, covering what it says is “commercially sensitive information”:
- Google will be required to implement “firewall restrictions” to prevent unauthorised use of competitively data gathered from ITA’s customers.
- Google will be prohibited from entering into agreements with airlines that would “inappropriately restrict” an airline’s right to share seat and booking class information with competitors of Google.
The settlement also includes a “formal reporting mechanism” to investigate any breaches of such conditions or if Google is believed to have acted unfairly.
Joseph Wayland, deputy assistant attorney general of the DoJ’s Antitrust Division, says:
“The Department of Justice’s proposed remedy promotes robust competition for airfare websites by ensuring those websites will continue to have access to ITA’s pricing and shopping software.
“The proposed settlement assures that airfare comparison and booking websites will be able to compete effectively, providing benefits to consumers.”
In a blog post, Google says:
“It’s important to us that ITA continue with business as usual, providing great service to its business partners. We indicated last July that we would honor ITA’s existing contracts. Today we’ve formally committed to let ITA’s customers extend their contracts into 2016.”
Once the legal formalities are worked out, Google says it is looking to close the acquisition “as soon as possible” and start “bringing our teams and products together”.
“We’re confident that by combining ITA’s expertise with Google’s technology we’ll be able to develop exciting new flight search tools for all our users. Up, up and away!”
The FairSearch anti-deal lobby says the decision is a “clear win for consumers”, claiming the acquisition in its proposed form would have violated antitrust laws.
The group says in a statement:
“By putting in place strong, ongoing oversight and enforcement tools, the Department has ensured that consumers will continue to benefit from vibrant competition and innovation in travel search.
“While this enforcement action is an important victory, Google’s abuse of its search dominance still threatens competition and consumers in many critical areas of online services.”
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About Kevin May
So…what happens in 2016 then? Seems like a short-sighted “fix” to this deal.
This is to be expected. It’s reasonable for short-term. And in the long-term (2016), there will be an ITA alternative or it will be irrelevant.
Google shifted direction dramatically last year, going away from abstract web services that were hard to use (Buzz, Wave, etc.) and towards content-focused plays (Boutiques.com, Google for Weddings) as if they had suddenly hired Richard Rosenblatt over at Demand Media.
I think everyone believes Google’s next step will be to collapse the distance between people searching for destination info and the point of purchase.
But instead of Google monopolizing the ITA software for itself, I fully expect Google to provide publishing partners with access to ITA web services to embed instant booking functionality within their content for consideration to similar access to their publishing workflows. In that scenario, it would be Travel + Leisure, not Google, that would emerge as a primary competitor to say, Orbitz.
about time…
little bit ironic that the ruling says “Google is prohibited from entering into agreements with airlines that would “inappropriately restrict” an airline’s right to share seat and booking class information with competitors of Google”.
Ironic because that sounds similar to the agreement Expedia has recently struck with AirAsia.
Hi all
I want to add new flight service in google search engine. could you please help me do.
Thanks