Google In Discussions To Buy Travel Software Company, Will FTC Ground It?
Most people have never heard of ITA. However it’s the dominant company that provides reservations (inventory management) software and performs other functions for the travel industry. The company’s client list includes major airlines such as American and Continental as well as popular travel sites such as Kayak and Orbitz. ITA is foundational infrastructure for many […]
Most people have never heard of ITA. However it’s the dominant company that provides reservations (inventory management) software and performs other functions for the travel industry. The company’s client list includes major airlines such as American and Continental as well as popular travel sites such as Kayak and Orbitz. ITA is foundational infrastructure for many of these firms.
The revelation that Google has been in discussions to buy ITA is reportedly unnerving to many of those companies that use its software. According to Reuters:
The concerns are so real that Kayak offered to buy ITA to keep the company out of Google’s hands, a travel industry source close to the situation said.
Kayak was being backed by Expedia Inc, which would have injected under $200 million into Kayak to make a deal happen, the source said.
But the talks went nowhere as Google was in exclusive talks with ITA, the source said, requesting anonymity because the person did not want to be named talking publicly about the search giant.
There’s no deal at this point. But the discussions are real; I had heard about them some time ago.
If an offer is made there will be a chorus of objections from travel sites. The potential arguments are on already display in the Reuters piece:
The concerns center around how Google might combine its dominance in the general search business with ITA’s strengths in the travel sector. ITA, for instance, provides data from its airline searches to others, including Kayak, Birge said.
“What if they decided to stop providing that data? What if they only provided that data to the parent company? What if they provided better data for those airlines to their parent company?”.
Some industry executives would like to see Google give assurances that it would not link using ITA to its general search results, the industry source said . . .
They would also like Google to commit to not “dumping” the services of ITA at lower prices than others could afford, the source said.
Google wouldn’t be buying a competitor so that argument is probably gone, from an anti-trust perspective. However there would be others, including the potential impact of such an acquisition on pricing, as suggested above.
The FTC, having “lost” the AdMob battle, would certainly take up arms in this case. It would probably have a stronger position given ITA’s clear market leadership and because of likely opposition that would come from travel verticals and some of the airlines that use its software.
The question I can’t quite answer is: why would Google need to buy ITA? Why couldn’t it simply license the software as do others? My only thought is that Google sees ITA’s capabilities as being much broader than just serving the travel industry and imagines a range of use cases and possibilities.
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