April 9, 2011

Google-ITA Deal Gets Gov’t OK, With Conditions

The US Government cleared Google for liftoff on Friday, allowing the search giant to move forward with its $700 million acquisition of flight data company ITA Software, but with strictly imposed conditions.

The US Department of Justice's anti-trust division said Google would be required to license the software, to continue to upgrade it, and establish firewalls to protect ITA clients' intellectual property. Google added that the deal required them to license the software until 2016.

The acquisition will provide Google a key role in online travel, giving it control over the technology that powers the reservation systems of most major US airlines and many online fare services such as Kayak, Hotwire, and TripAdvisor.

Originally, Google only promised to honor all of ITA's current contracts, which expire over the next couple of years. ITA officials were concerned that Google would keep the innovations for itself. Under the terms of the approval, any disputes would be subject to binding arbitration.

Google also agreed to keep ITA separate from other Google operations to ensure that it cannot misuse proprietary customer data or technology that runs through ITA servers.

The government will also monitor Google to ensure it doesn't engage in anticompetitive behavior, which might include manipulating its own powerful Internet search engine to lead consumers to its own services, or bury links to rivals further down in the search results.

Google will also be subject to broad requirements to report its online travel operations to the government. In addition, the government will establish a forum for complaints about Google's behavior.

The Internet search giant vowed it would not sell airline tickets or book other travel arrangements on its own site. Rather, it said it plans to use ITA to improve its search results for travel, by giving consumers more choices and better ways to search for ticket deals. This would enable the company to command higher ad rates from airlines, hotels and rental car agencies, among others, trying to reach potential customers.

In a blog post on Friday, Google suggested that by simply typing in "flights to somewhere sunny for under $500 in May" into the Google search bar, a user would get not just a set of links, but also flight times, airfares, and a link to sites selling those flights.

Joseph Wayland, deputy assistant attorney general of the Justice Department's Antitrust Division, told The Associated Press (AP) in a statement Friday that online airfare comparison services that rely on ITA software will still be able to compete, though.

Several companies have banded together to oppose the ITA deal from the start, including Microsoft Corp.'s Bing, Travelocity, Kayak Software Corp. and Farelogix Inc. The group said in a statement Friday that the Justice Department agreement with Google guarantees that "consumers will continue to benefit from vibrant competition and innovation in travel search."

An official with the Justice Department said that the potential government shutdown had nothing to do with the deal being pushed through on Friday. But some disagreed with that assumption. "They were rushing to get it done today because of that," said a source close to the deal.

Wayland said the proposed settlement "promotes robust competition for airfare websites by ensuring those websites will continue to have access to ITA's pricing and shopping software." He added: "It assures that airfare comparison and booking websites will be able to compete effectively, providing benefits to consumers."

Google said it was "excited" to get the deal approved.

"We're moving to close this acquisition as soon as possible, and then we'll start the important work of bringing our teams and products together," Jeff Huber, a senior vice president at Google, wrote in a blog post.

"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," said Huber.

FairSearch.org, a coalition of opponents of the acquisition, welcomed the conditions imposed by the Justice Department on the deal.

"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," FairSearch.org said.


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