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2010

Google Gobbles Travel Software To Fatten Its Travel Search Portal

December 29, 2010 0

New York — It seems that the once innocent and well-meant start-up that is now known as Google is once again chomping its way through the internet is making waves as it pushes into new arenas. The Mountain-View, California-based search engine titan Google acquired the company that made it easy for travelers to compare airfares, ITA Software Inc., for $700 million price tag, which could give it a leading edge in the market for online travel search results.

About six months back, Google disclosed its intention to buy the company ITA Software Inc., which has caused a ripple of concern through the industry as online travel agents (OTAs) fight back in the ever intensifying war of Google versus the internet.

Since then, the gigantic players in online travel sphere have pulled lines, for and against the deal, and regulators have sought more time and information for an anti-trust investigation, which continues.

Google’s acquisition of ITA Software risks, in time, diminishing rivalry in the U.S. travel industry, a law professor at Columbia University said.

“In the longer term … the danger is that this deal could empower Google such an advantage that travel search becomes like other forms of search, dominated by one engine, which could eventually stifle innovation,” The New York Times quoted professor Tim Wu as saying Tuesday.

This acquisition has caused a wave of concern throughout the travel industry, and OTAs are fighting back, fearful that travel search would fall into the hands of monolithic search engine giant’s control, stifling competition.

The acquisition, if sanctioned, would enable Google, the dominant search engine, digest ITA, which was established in the 1990s by computer scientists at the Massachusetts Institute of Technology and has become the prominent provider of flight data to airlines, travel agents, global distribution systems, flight comparison sites and technology companies.

According to a NY Times report, a coalition of Expedia, Kayak and Microsoft have formed FairSearch.org to request that regulators thwart the deal before Google takes any further action.

While Kayak is in the process of filing its first public offering, it emphasized that a combined Google-ITA could present a major risk to its future success. Back in April, Google referenced a Juniper Research study that clearly demonstrated that travel searchers had surpassed online and TV ads as the number one source for determining travel sites by consumers.

The danger is that travel will become like so many other forms of search which are dominated by just one search engine, stifling future innovation and creativity. Kayak warned of a risk to its business if such a Google-ITA combination were to take place and is currently in the process of filing its first public offering.

After assessing the transaction, US senator Herb Kohl (Democrat, Wiscosin), who is chairman of the judiciary committee’s anti-trust subcommittee, wrote a letter this month to Christine A. Varney, the assistant attorney general in charge of the anti-trust division of the justice department, urging a careful review and certain stipulations.

Senator Kohl, said that the deal could greatly affect the online travel search which is relied upon by millions of consumers. Other OTAs are less aggressive in attacking Google and are taking a wait-and-see approach.

The author of the new book “The Master Switch,” Professor Wu said that Google likes to enter a market and fix perceived problems, essentially then commanding that particular area of online search or activity.

For its part, Google vows to honor existing ITA agreements and to add customers. It asserts that the acquisition will make comparison shopping easier and thus drive more customers to airlines and online travel agencies. It also says it has no interest in selling tickets.

But many suggests that technology is presenting a new direction for travel sales in general. Last week, American Airlines cut ties with online ticket seller Orbitz, because Orbitz refused to work with “Direct Control,” a selling program that American said would help it customize ticket sales.

However, since ITA supports the sites of Bing Travel, TripAdvisor, Orbitz, Kayak, Hotwire, CheapTickets and dozens more — travelers do not really care who they are booking with so far as long as they get the best deal. From this perspective, Google could devise a commercial means to direct business — if not to their own OTA — to preferred vendors it partners with. Airlines, hotels and travel destinations could essentially pay Google for search rankings — as they currently do with other vertical markets based on their keywords and paid search models.

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