Report: Google Negotiating With DOJ To Prevent Suit To Block ITA Deal

Politico is reporting, as have other outlets, that Google and the Justice Department (DOJ) are now negotiating intensely in the waning days of its investigation into the anti-trust implications of Google’s potential acquisition of travel software company ITA.

According to the Politico article:

The Justice Department has made it clear to Google that it’s willing to go to court to block its acquisition of travel software-maker ITA – and Google has responded by stepping up negotiations to save the deal, a source familiar with the talks tells POLITICO. Sources say that a deal between Google and DOJ’s antitrust lawyers could be “days away,” but others also warn that negotiations about the $700 million acquisition could fall apart at any time.

FairSearch.org, consisting of most of the big travel sites online and Microsoft, have aggressively lobbied to prevent the deal from happening.

Licensing guarantees

One issue now under discussion, and the apparent centerpiece of the negotiations to avoid litigation, is whether licensing guarantees for ITA’s software will be sufficient to satisfy the DOJ. Many though not all of the FairSearch member sites license ITA’s software.

FairSearch, however, has tried to shift attention from the narrower issue of licensing to a broader discussion about Google’s potential ability to slay competitors by self-referring traffic. FairSearch members want the deal blocked and argue that a Google Travel vertical would win simply because Google could direct its massive search traffic to it.

This “search neutrality” critique has increasingly been leveled against Google by competitors and critics, though it’s highly problematic for many reasons.

Previous failures

It’s also worth pointing out, however, that simply because Google introduces a product it doesn’t mean it will succeed. For example, Google Buzz, Knol, Wave, SearchWiki, Dodgeball, Orkut, Google Answers and even Google Checkout are high profile disappointments or outright failures. And there are others as well.

It’s unlikely however that Google would pay nearly $700 million and then produce a mediocre travel experience. In addition, travel is adjacent to local, where Google has increasing strength. It’s highly likely that travel and local would reciprocally reinforce and cross-pollinate one another.

One can expect that a Google Travel experience would be successful. Google intends to focus on the vertical and devote attention and effort to creating something new and better in Google’s mind. Google said when the deal was announced that it wants to “solve end user problems” around travel search and create new types of experiences that will “look different” from what exists today.

Feds “gunning” for Google?

It appears that the “feds” (FTC/DOJ) have been seeking a “win” vs. Google for some time. Three years ago, before Bing took over Yahoo search, Google was forced to abandon a search deal with Yahoo because of intended anti-trust litigation. More recently, the government was ready to sue to block the AdMob acquisition when Apple bought Quattro, thus adding a formidable competitor to the mobile advertising space and thwarting the FTC action at the last minute.

The Politico article suggests that the framework of a deal around licensing guarantees and to approve the acquisition are in place but that it could still “collapse.”