Washington — The Justice Department last week gave the green light to Google Inc.’s purchase of flight-date company ITA Software with stiff conditions, at the same time left the option open to a larger investigation into whether Google fiddles with search results to hurt rivals. Google agreed to the conditions.
The decision, which now empowers Google to spread its wings into the online travel industry, comes as new CEO Larry Page reorganized the company’s management structure in an attempt to accelerate further accomplishments in social media networking, mobile and other key businesses.
Both Google and its adversaries of the deal expressed enthusiasm for the settlement proposal, which now must be approved by the judge hearing the DOJ’s complaint.
While the Justice Department blessed Google’s $700 million deal with the ticketing software company. The DOJ said the deal Google originally proposed would reduce competition among flight comparison websites and would reduce choice and harm innovation. Google assured to license the software for five years, to continue to upgrade it, and to establish firewalls to protect ITA clients’ intellectual property.
The Justice Department’s anti-trust section, however, chalked out a number of concessions from Google and imposed strict conditions on the Internet search giant to allow the acquisition to go ahead. The proposed legal settlement, which will need the approval of a US District Court, requires Google to develop and sell ITA software to airline-ticket sites “on fair, reasonable and non-discriminatory terms,” including Kayak and Hotwire.
Google has big plans as it grows, but governments are keeping it under tight scrutiny. Under an accord with Justice Department, Google also agreed to fund R&D at the same levels ITA has in recent years.
For Google, which witnessed unhappy ending to its proposed book scanning settlement last month, the DOJ’s deal represents a significant win, even as a compromise.
“We are thrilled that the U.S. Department of Justice today approved our acquisition,” said Jeff Huber, SVP of Google’s commerce and local group, in a blog post.
Moreover, this ITA buy is part of an acquisition and hiring spree as Google aims to ensure its online services stay on top as Internet surfers go mobile and turn to services like the wildly popular social media network Facebook.
Several online travel information and booking sites, such as Expedia, Kayak, Hotwire, Sabre Holdings and Travelocity, had been seeking to block the Google-ITA deal, claiming it would give Google too much control over the lucrative online travel market and lead to higher prices.
The Justice Department said “the acquisition, as originally presented, would have substantially lessened competition among providers of comparative flight search websites in the United States, resulting in reduced choice and less innovation for consumers.”
US deputy assistant attorney general Joseph Wayland said the recommended settlement “promotes robust competition for airfare websites by ensuring those websites will continue to have access to ITA’s pricing and shopping software.
“It assures that airfare comparison and booking websites will be able to compete effectively, providing benefits to consumers,” Wayland said.
Nevertheless, the restrictions posed on Google that come with the deal were appreciated by FairSearch.org, a group backed by Microsoft and a number of travel websites.
“Today’s decision by the Justice Department to challenge Google’s purchase of ITA Software is a clear win for consumers,” FairSearch.org said in a statement. “The Department concluded Google’s unrestricted control over ITA’s key flight search technology would have violated the antitrust laws.”
A key lawmaker has been disapproving of Google, and continued so on Friday. “We continue to scrutinize broader questions about the fairness of Google’s search engine, and whether it preferences its own products and services to the detriment of competitors,” said Sen. Herb Kohl, chairman of the Judiciary Committee’s antitrust subcommittee.
One concern was that Google could make the software more expensive or less available to travel sites — or refuse access completely. Another associated concern was that Google could provide better information and deals to travelers through its highly popular search engine.
ITA, a 500-person firm established in 1996 by Massachusetts Institute of Technology computer scientists, specializes in administering airline data, including flight times, availability and prices.
Lastly, the blessing follows an eight-month long investigation, and must still be submitted to judicial review. Once completed, the settlement would be in place for five years, after which Google is free to use ITA as it sees fit. However, the government will still be able to monitor Google’s travel search operations. Google must also set up a formal reporting process for any complaints that it is acting improperly.