6 years ago

Google sheds light on size of ITA Software business

ITA Software, up until April, had been a privately held company, but Google today shed a bit of light on its acquisition’s revenue numbers.

Google’s “other revenues” — meaning everything but advertising revenues — increased 51.6% in the third quarter to $385 million and an official attributed much of the boost to the “year over year impact of ITA.”

Google acquired ITA in mid-April so Google’s third quarter results, which were released today, included the first full quarter with ITA in the fold.

The $385 million in other revenue amounted to a $131 million increase compared with the third quarter of 2010, and one analyst surmised that about $75 million to $100 million of that increase might be tied to the presence of ITA and its revenue, largely from airlines.

Of course, a $75 million to $100 million quarterly revenue contribution from ITA is just a drop in the bucket when you consider Google’s $9.7 billion in total revenue for the third quarter.

Considering that the third quarter usually is a relatively strong one on a seasonal basis for travel, it isn’t hard to extrapolate that ITA’s annual run rate could be in the $200 to $250 million ballpark.

That might make ITA’s airline search business an even larger enterprise on a revenue basis than Kayak’s travel metasearch business, which recorded about $171 million in revenue in 2010 and nearly $110 million in the first six months of 2011.

Or at least the two, albeit different, businesses would be in the same conversation when considering their relative size.

Google may have considered buying Kayak at one juncture several years ago, but settled on ITA and its technology for $700 million, and rolled out Google Flight Search in mid-September.

In a conference call today about Google’s third quarter results, Susan Wojcicki,  vice president of advertising, rehashed a familiar refrain about the “speedy” flight-search solution, saying the launch was “the takeoff and not the final destination.”

Meanwhile, CEO Larry Page defended Google’s approach in various verticals, including travel, when asked about Google’s strategy in light of the company getting much closer to the transaction on several fronts.

Page said Google merely is trying to improve users’ search experience, as it has done throughout its history.

Coincidentally, Tom Barnett, counsel to Expedia, submitted answers to questions posed by the US Senate Antitrust Subcommittee, meeting today’s deadline to respond to the committee.

Asked whether “there is an antitrust problem with Google favoring its own services in light of Google’s dominant market share,” Barnett replied, in part:

By artificially promoting its own products, Google deprives competing sites of traffic and advertising revenue, raises their costs as they are forced to spend more on paid search ads to make up for part of the lost traffic, and reduces their incentives ability to innovate.

Interestingly, Barnett worked closely with the FairSearch coalition, which opposed the ITA acquisition and included Microsoft as a member.

Barnett raised the spectre that Microsoft could decide to shut down its Bing search engine, further entrenching Google as dominant in search.

Said Barnett: “Further, the large losses suffered by Bing each year raise the distinct possibility that Bing will exit the market, leaving Google as the only general search engine in the US.”


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Dennis Schaal

About the Writer :: Dennis Schaal

Dennis Schaal was North American editor for Tnooz.



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  3. Dennis Schaal

    Dennis Schaal

    Zachary: Bing is losing buckets of money for Microsoft. Maybe it’s a loss leader that Microsoft can live with, but Barnett is not some wild prognosticator. He knows what he’s talking about and presented it as a possibility.

    The idea is not crazy.

  4. zachary

    Bing shut down? Is he crazy?? That will never happen

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