Google-ITA Software deal: Major European headache surfaces
Noises emerging this week from Brussels, home to the European Commission, suggest the search giant could be facing scrutiny from members as to whether a beefing up of its position in travel after acquiring ITA Software needs to trigger a shake up of wider regulatory powers.
The problem Google could potentially face is not around the subject of competition, as its acquisition of ITA and the travel tech company’s client base is predominantly a North American issue.
Investigators at the Commission are beginning to be concerned that Google’s dominance of the search market in Europe, coupled with how it decides to use the ITA technology, could seriously impact on consumers and their ability to compare air fares.
There are now increasing calls for the Commission to undertake a study as to whether Google should be seen in the same light as other air data firms, namely the global distribution systems.
A source who wished to remain unnamed but is well-placed in the regulatory world of Brussels, says:
“In a GDS environment, the display neutrality concept enshrined in the GDS Code of Conduct addresses this issue. If Google is going to provide services that are similar to those of GDSs, then probably safeguards similar to those in the GDS Code of Conduct should be imposed on Google.”
Such a move would be a enormous leap for those that administer the GDS Code of Conduct and how regulation of the distribution of airfare data across the continent is handled.
Placing Google alongside the GDSs (as it has done so itself with the travel technology ecosystem chart) within a regulatory framework also has the opportunity to trigger other major permutations.
The push to include Google in such a framework is considered by a number of those close to the situation to be primarily a GDS-led drive.
But Google could argue that if it is subject to such oversight by regulators then other travel search providers (B2C and B2B) should be included – a prospect likely to keep lobbyists in Brussels tied up for years.
For its part, Google remains focused on the competition element of the deal and will not address the Code of Conduct issue, saying:
“The [ITA] transaction is subject to normal pre-merger notification procedures in the United States only. ITA Software’s European revenues aren’t large enough to warrant European regulatory review.
“We think this combination will benefit travelers as well as those seeking their business, but closer scrutiny has been one consequence of our success, and on that basis we wouldn’t be surprised if there were regulatory review before the deal closes.”
An alternative and radical position could be that if commissioners decide Google is not to be included in the regulatory framework then the same powers should be relaxed for the GDSs as well.
A Travelport official says:
“Given that there are so many factors in relation to the potential Google/ITA acquisition that remain to be resolved and/or announced, it would be inappropriate for Travelport to speculate on these specific questions.”
Kevin May is a senior editor and one of the co-founders at Tnooz. He was previously editor of UK-based magazine Travolution and web editor of Media Week UK from 2003 to 2005.
He has worked in regional newspapers (Essex Enquirer) and started his career in journalism at the Police Gazette at New Scotland Yard in London. He has a degree in criminology, a postgraduate diploma in magazine journalism and will be publishing his first book - a biography about electronic band, Depeche Mode - soon.