As reported by Tnooz, Kayak and Microsoft’s Bing will enter a strategic alliance. This is remarkable for two reasons: First, Kayak and Bing used to be – and in a way still are- competitors and second, this alliance is directly connected with the Google-ITA deal that still is being investigated by the Department of Justice.
Starting in a few weeks Kayak, the leading metasearch site, will power Bing’s metasearch for flights. Most likely other services will follow. Kayak could for example supply Bing’s hotel search which is currently sponsored by Orbitz. Bing plans to use Kayak’s search results as a basis for new innovative travel search offers, such as autosuggest solution, price predictor, rate indicator and Flight Answers.
There are several reasons for Bing to enter this alliance. It seems Bing was not content with its current travel offers. Although Microsoft acquired Farecast and tried to innovate internally, it seems they could until now not come up with a satisfying solution for their travel search that could compete with Kayak’s search engine. Part of reason might be that being a general search engine, it is harder for Bing to innovate in a special area, such as travel, than it is for a specialist. That is why they changed their strategy and entered this alliance. Now they can use Kayak’s innovative services as a basis and innovate on top of that with their products.
So by combining their complementary competencies, Bing hopes to foster innovation and create a compelling user experience that can compete with Google in the future. Furthermore, partnering with Kayak could be the first step for Bing to sever its connection to ITA. But since both Bing and Kayak use ITA Software for their flight search, Bing will not be completely independent of ITA.
The Google-ITA deal
Although Kayak has not yet made a comment disclosing all their reasons to enter the alliance, the reasons for Kayak are quite obvious: It will help Kayak achieve better results with its eventual IPO, it will increase their overall revenue and through Bing will have a greater distribution. And last, but not least, Kayak can strengthen its position in the market to be able to survive possible future competition with Google.
However, Kayak and Microsoft are facing a dilemma. They are both members of Fairsearch and strongly oppose the Google-ITA deal. But despite all its advantages, their alliance could just be a good reason for the DOT to allow the deal, because it might be perceived as a proof that there are strong players in the market that can successfully compete with Google-ITA.
For a long time there has been a massive lack of innovation in the travel industry. Google’s very likely entrance into the market might finally change that, because Google certainly has the money and the technology to create a completely new user experience and thus bring real innovation to the market. In this context, it is only natural that other players adjust their strategies to stay competitive.
The next months are going to be very interesting. We are all still waiting for the DOT’s final decision concerning the Google-ITA deal and Kayak and Bing have just started their cooperation. In any case, now that Kayak and Microsoft have made their move, it will be interesting to see how other major players, such as Expedia, will position themselves to remain competitive.
Image by Toria