FairSearch blasts Google Flight Search ad model as online travel group enlists

FairSearch is alleging that Google Flight Search may be violating consumer protection laws on code-sharing and bag-fee disclosures as the lobbying group picked up a key new member, the Interactive Travel Services Association.

In addition, FairSearch contends that Google Flight Search may be moving toward a CPA (cost per acquisition) advertising model, which allegedly could be anticompetitive.

ITSA is a travel trade group representing major global distribution systems and online travel agencies, including Amadeus, Travelport, Orbitz and Priceline, all of which sat on the fence (publicly, at least) during last year’s US Department of Justice antitrust review of Google’s now-consummated acquisition of ITA Software.

But, ITSA’s joining the anti-Google forces signals growing unease in the GDS and OTA sectors as the latter so far have been largely shut out of Google’s flight metasearch solution.

Brian Ek, Priceline spokesman, says “ITSA’s joining was discussed with ITSA membership and we supported it.”

That statement is a far cry from past comments by Jeffery Boyd, CEO of major Google customer Priceline, arguing that Google Flight Search would be likely to deliver more qualified leads to the OTA and thus could be beneficial.

When asked about ITSA’s new membership in FairSearch, Orbitz spokesman Chris Chiames played both sides of the street.

“We are still evaluating our options with regard to FairSearch,” Chiames says, “but are supportive of ITSA’s participation on behalf of the industry.”

And, asked whether ITSA’s new FairSearch ties mean Travelport is now joining the anti-Google forces, too, Travelport spokeswoman Jill Brenner stopped short of expressing that sentiment.

“ITSA is involved in many issues, and not all member companies agree on all issues all of the time,” Brenner says. “We continue to monitor Google in the space and welcome all new entrants, as long as there is a level playing field.”

Until now, FairSearch members included Microsoft, Kayak, Expedia, Sabre/Travelocity, TripAdvisor and others. In addition to ITSA, FairSearch now counts adMarketplace, Twenga and ShopCity.com as new members.

The lobbying organization — FairSearch, that is — is trying to keep a lot of heat on Google, with activities ranging from an ad campaign to blog posts and a position paper, Google Flights Search: Is Google Keeping Its Promises on ITA Software?

In the paper, FairSearch claims Google Flight Search may be violating consumer protection laws by failing to adequately to disclose airline code-sharing arrangements and bag fees.

A Google spokesman declined to comment on this issue.

In addition, FairSearch argues that Google Flight Search may be moving toward a CPA (cost per acquisition) model with airlines in which Google would receive a percentage of ticket sales.

“And, if Flight Search ads are being sold as CPA units, then Google benefits when consumers pay more for airfare,” the FairSearch paper contends.

And, by extension, this line of reasoning also holds that it would be in Google’s interest to fill its Google Flight Search pages with its own CPA-based product and to exclude less lucrative CPC links to OTA sites and those of other advertisers.

There are some possible gaps in these arguments, however.

First, FairSearch member Kayak uses the CPA model for a portion of its business. Kayak notes in its IPO filings that it uses both the CPC model for referrals to OTA and supplier sites, and the CPA model when consumers book on Kayak.com.

And, second, would Google really have an incentive to show higher airfares than the competition even if Google theoretically was taking in greater revenue using the CPA model?

Who would want to book these flights if lower fares would be available on competitors’ websites? Displaying higher airfares wouldn’t be a marketshare play for Google Flight Search.

FairSearch’s theories on Google using the CPA model — or how Google would use the CPA model — likely are speculation because it doesn’t seem like final decisions have been made.

Google is experimenting with various monetization modes on Google Flight Search, says a spokesman, who declined to get into any detail.

All concerned realize that Google will eventually monetize Google Flight Search pages in a variety of ways.

It is not difficult to envision sponsored ads framing the core flight search links in Google Flight Search before long.

And, if Google does opt for a CPA model for its airline booking links, would it be set in stone that Google would receive one flat percentage rate based on the ticket price?

Perhaps the CPA percentage rates could be tiered or, then again, maybe in some scenarios Google could charge a flat fee regardless of the ticket price.

And, what if Google decided to charge a lower CPA percentage rate for popular routes based on greater volumes of ticket purchases?

Might that even be financially beneficial for Google and consumer-friendly?

FairSearch does raise a valid point regarding Google’s statement during the regulatory process that Google Flight Search would benefit the entire travel ecosystem. Google stated at the time:

The acquisition will benefit passengers, airlines and online travel agencies by making it easier for users to comparison shop for flights and airfares and by driving more potential customers to airlines’ and online travel agencies’ websites.

But,  online travel agencies have been relegated to links on the bottom of Google Flight Search pages for now.

Google insists that it wants greater OTA participation in Google Flight Search, but that the airlines have stomped their feet, protesting that OTAs are not welcome dance partners.

Regarding dance partners of the business variety, one thing is clear — Google and FairSearch will not be whispering sweet-nothings to each other any time soon.

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Dennis Schaal

About the Writer :: Dennis Schaal

Dennis Schaal was North American editor for Tnooz.



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