October 27, 2010

Net Travel Firms Team Up To Fight Google/ITA Deal

A coalition of leading online travel agencies are joining forces to block Google's proposed $700 million acquisition of airline ticketing software company ITA Software Inc., calling on federal regulators to stop the move.

The Internet travel firms say the deal would give Google access to technology that plays a critical role in finding the best airfares, something they say would lead to higher prices and less industry innovation.

"Acquiring ITA Software would give Google control over the software that powers most of its closest rivals in travel search and could enable Google to manipulate and dominate the online air travel marketplace," said the online travel agencies in a statement at FairSearch.org, a Web site the coalition launched to oppose Google's plan.

"The end result could be higher travel prices, fewer travel choices for consumers and businesses, and less innovation in online travel search," said the coalition, which includes Expedia, Hotwire, TripAdvisor, Farelogix Inc., Kayak and Sabre Holdings and its brand Travelocity, and others.

"Google's proposal to buy ITA Software, the leading source of critical air fare software used by search engines and travel sites alike, threatens the competitive online travel search market, and could limit the competition and innovation that benefits consumers. If the transaction is approved, consumers should expect to face higher prices and less choice when searching for travel online," read a statement on the FairSearch.org Web site.

"We founded Kayak to give travel consumers access to more choices and lower prices, but this deal could result in just the opposite," said Kayak co-founder and CEO Steve Hafner.

Expedia CEO Dara Khosrowshahi suggested that Google's acquisition would also have implications for travelers.

"Combining Google and ITA -- the dominant providers of Web search and flight search technology, respectively -- raises some serious concerns for travelers and the online travel industry."

Former U.S. assistant attorney general Thomas Barnett, who now serves as counsel to Expedia, called on the U.S. Department of Justice to "thoroughly investigate the proposed acquisition."

Headquartered in Cambridge, Massachusetts, ITA Software has roughly 500 employees, and specializes in organizing airline information such as flight times, availability and fares.  The company's QPX flight data organization tool uses algorithms to incorporate flight information from airlines, including pricing and availability, into a searchable database.

The QPX software is used by online travel agencies such as Kayak, Orbitz and TripAdvisor as well as airlines such as United, American, Continental, Southwest, USAir and others.

Microsoft's Bing is also an ITA customer.

For its part, Google dismissed the claims made by FairSearch.org, saying the goal of the acquisition was simply to improve service to users.  

"Our reason for making this acquisition is simple: ITA will help us provide better results for our users," said Andrew Silverman, a senior product manager with Google, in a posting on the company's blog.

"It's disappointing that a number of travel companies have today announced their concerns about the deal," he wrote.

"ITA and Google are not competitors so there will not be less choice for consumers," he said, emphasizing that Expedia, Priceline and Travelocity -- the three leading U.S.-based online travel sites -- use data provided by rivals of ITA.

Silverman said Google has no plans to sell airline tickets directly to consumers, and will honor all of ITA's existing agreements.


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