Almost 10 months ago Google proposed to buy ITA for about $700 million. However, it took much time and many public battles with opponents of the acquisition such as Fairsearch until the DOJ made its decision and finally allowed the Google-ITA-Deal. Google has to comply with several restrictions though.
To ensure fair competition Google has to continue to license ITA’s QPX software to competitors, to fund research and development of ITA’s QPX software and to further develop and offer ITA’s next generation InstaSearch product to travel websites. Furthermore, the DOJ imposed restrictions to prevent Google from abusing “commercially sensitive information”. For example, Google will have to implement firewall restrictions within its company to prevent unauthorized use of ITA’s customer data.
Interestingly, both Google and Fairsearch members expressed their satisfaction about the DOJ ruling: “We’re moving to close this acquisition as soon as possible, and then we’ll start the important work of bringing our teams and products together. We’re confident that by combining ITA’s expertise with Google’s technology we’ll be able to develop exciting new flight search tools for all our users. Up, up and away!“, said Jeff Huber, Senior Vice President, Commerce and Local at Google in a blog post. He also confirmed that Google would let ITA customers extend their contracts into 2016.
On the other hand, Fairsearch released a statement saying: “Today’s decision by the Justice Department to challenge Google’s acquisition of ITA Software is a clear win for consumers. [..] By putting in place strong, ongoing oversight and enforcement tools, the Department has ensured that consumers will continue to benefit from vibrant competition and innovation in travel search.”
While it remains to be seen who really benefits the most from the DOJ’s decision and what happens in 2016, Google achieved its main goal: To enter travel vertical. After all, Google is allowed to develop its own products for travel search or develop on top of the QPX software.
Additionally, the DOJ’s ruling did not really touch the problem of search discrimination. Google may have to honour existing agreements, but there is the danger that it could use its dominance in travel to favour its own products. And given the importance of travel for Google’s overall revenue, it is not unlikely that Google will try to do so.
“For years our industry has lacked behind with innovations. Rather than using technology to improve customers’ experience to the fullest extent possible, many industry players tried to play it safe and maintain the status quo. Considering the revenue generated in the industry, it was only natural for competitors outside our industry to enter and close this “innovation gap”.
And this is exactly what Google has done and will do in the future. I expect Google to initiate a remarkable technology push and to significantly improve users’ travel search experience. It is no surprise to me that the acquisition was approved. If this ruling will have an impact on the Sabre/Farelogix ruling has to be seen, as this ruling was put on hold until the Google ruling was finalized. One might think that if Google does not have monopoly then how can GDSs have one? But the recent AA accusations show that there is a lot more to the stake. Let’s hope everything will be open and we can build on each other for the good of the traveler.
The next months will definitely be very exciting for our industry. Not only because we will see what Google really wants to do with ITA and what kinds of products they are developing, but also because many industry player will have to react to Google’s market entry and maybe reconsider their own strategy.
Image by Kritchanut