Microsoft Joins FairSearch Group Opposing Google-ITA Acquisition

Microsoft has long and openly been involved in opposing some of Google’s high-profile deals and acquisitions. It helped scuttle the proposed Google-Yahoo search deal that paved the way for its own deal with Yahoo. It unsuccessfully opposed the DoubleClick and AdMob acquisitions. It also owns Ciao, one of the complainants that helped launch the recent formal European anti-trust investigation against Google.

It’s no surprise then that Microsoft has joined, a coalition of online travel companies opposing Google’s estimated $700 million deal for travel software provider ITA. The acquisition is currently under Department of Justice review. FairSearch includes many of the major travel sites online:

Beyond simply trying to thwart a rival, Microsoft has a very “personal” reason to join the group; Bing Travel (formerly Farecast) is partly powered by ITA software. FairSearch got off to a late start but has gained momentum and visibility in the past couple of months.

In addition to the group identified above, many airlines also use ITA software for scheduling (Virgin Atlantic, American, Continental, Southwest, others). However to my knowledge none of them have come forward in opposition at this point. If they were to come forward it might create a perception that the entire industry opposes the deal. But that’s not currently the case.

Yesterday in announcing Microsoft joining the group, brought out the anti-trust buzzwords and concerns in its statement:

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. The end result could be higher travel prices, fewer travel choices for consumers and businesses, and less innovation in online travel search.

Choice, pricing, competition and innovation are the things that anti-trust regulations are intended to help protect. It’s quite unlikely, however, that a Google Travel site or enhanced search capability would have a direct impact on airline prices. It could over time make travel advertising and keywords on Google more expensive for airlines and others if Google were able to consolidate consumer travel search. But that’s not a concern about airline or travel pricing itself.

These sites are more directly concerned that Google would simply take their traffic and thus their revenues. And while we haven’t seen what Google might build that is a real possibility. That doesn’t necessarily rise to the level of anti-trust or regulatory concern. Anti-trust rules aren’t supposed to protect existing competitors vs. new ones.

On the other hand the potential elimination of competing travel destinations might have an adverse effect on consumer choice over the long term. That concern is somewhat abstract; and just because Google enters a segment doesn’t always mean it wins (e.g., Buzz, Knol, Checkout). I would however expect Google to build a fairly effective Travel site/search capability.

Apparently European regulators don’t have to approve the deal because, according to Google, ITA revenues in Europe are not large enough to justify European involvement. This is key for Google because the Europeans would probably try and block it given their growing and increasingly vocal concern over Google‘s size and power.

There are several potential scenarios and outcomes of the DOJ investigation: unconditional approval, a suit to block the deal or approval with negotiated conditions. Conditions might include restrictions or assurances that ITA will continue to serve other sites and Google competitors. Google has said it will honor all ITA’s formal relationships.

My guess is that we’ll either see approval with some conditions or an attempt to block it by the DOJ. The Federal Trade Commission was set to try and block the AdMob deal until Apple came along and bought Quattro Wireless, creating a seemingly formidable competitor in the mobile ad market.

Even though the DOJ review of Google-ITA is about the particular facts and potential impact of the acquisition on the travel industry I suspect there are people at the DOJ who would like “another go” at Google. The internal “predisposition” may be to oppose the deal but the agency may be assessing the strength of that position legally. It would have to win in a court action seeking to block the acquisition.

In an unrelated blog post, Google discusses its view of anti-trust law and argues that it should be permitted to continue making acquisitions — like ITA.

Related Topics: Channel: Industry | Google: Business Issues | Google: Critics | Google: Legal | Search Engines: Travel Search Engines | Top News


About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

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  • Dan Rogers


    “It’s quite unlikely, however, that a Google Travel site or enhanced search capability would actually impact airline prices. It could over time make travel advertising and keywords on Google more expensive for airlines and others if Google were able to consolidate consumer travel search. But that’s not a concern about airline or travel pricing itself.”

    Umm… where is the money to pay for the more expensive advertising going to come from? The Tooth Fairy? No, it will come from the airlines pockets which will ultimately translate into higher consumer prices or lower business margins.

    This is not a good deal for the industry. If Google just wants access to the data to build a travel vertical, then nothing is stopping it just getting the data from ITA. Buying ITA is a monopolistic and unnecessary move with nefarious intent on Google’s part.

  • Greg Sterling

    The question about airline prices is near term vs. long term. Yes, I agree that longer term there could be negative consequences in several respects. But I don’t think you’re going to see fare increases if Google is allowed to purchase ITA as any kind of immediate consequence.

    TV and newspaper ads typically cost more than keywords. That’s where lots of travel advertising now happens. And how much do you really click on ads when you do a travel search? It’s really about organic content and OTAs/travel destinations.

    The biggest “danger” to consumers is that other travel sites shrivel and die and they have fewer choices about where to look for travel information.

  • Dan Rogers

    Hey Greg,

    “The biggest “danger” to consumers is that other travel sites shrivel and die and they have fewer choices about where to look for travel information.”

    I’m still not convinced. If Google controls the distribution (which it will do if the other travel sites die) then it will be able to squeeze extra profits out of the industry (which incidentally is the whole point of monopolising a vertical).

    Another way to frame this situation is to ask – what incentive does Google have in owning ITA other than putting the squeeze on other players? I can’t think of one….



  • anonymous54481

    Come on now Greg… This has nothing to do with Travel. Or at a minimum, little to do with travel. That’s like gravy on a multi-billion dollar opportunity.

    Google is about to get a screamin deal and ITA stakeholders should be kicking themselves for the paltry $700M deal. Especially after seeing that G was willing to pay $6B for Groupon…when ITA has something much more valuable to G.

    ITA systems are the choke funnel for amazing data. Imagine the advertising system you could build if you knew:

    - Everyone coming into a given airport on any given day. Arrival time. Departure time. Origin. Destination. Food allergies. Maybe even affinity program numbers (elite status, etc).
    - That the group traveling is a single person or family of 3, 4, etc
    - Add a little bit of magic to tie together mobile phone (the first thing people turn on when arriving) and you know even more. Tie that mobile phone ID (Google login) to desktop search and even more.

    Indoor digital displays with personalized advertising (Minority Report!), mobile advertising, coupons, intent, etc, all possible. And because you own ITA, a Google company, you just throw it under the same Google terms of service.

    Oh and if the airlines complain once they see what’s happening, throw them a bone because they’re broke. Oh, maybe they already know. And that’s why they aren’t in the groups fighting this.

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