Travel Sites Fly in Formation to Ground Google Buyout of ITA Software
Several online travel sites launched a coalition Tuesday to shoot down Google's (GOOG) proposed $700 million buyout of flight search technology developer ITA Software, issuing a mayday to federal antitrust regulators to challenge the deal.
Online travel site operators Expedia (EXPE), Farelogix, Sabre Holdings and Kayak have formed FairSearch.org, marking one of those rare situations where competitors have teamed up as a collective group to fight what they believe is a greater menace to their business.
ITA Software provides flight search technology to some of the members of the coalition and their brands like Expedia's Hotwire and travel search provider Kayak. ITA also powers 65% of all U.S. carrier-direct online flight searches and six of the top 10 airline carriers such as American Airlines (AMR), Continental Airlines (UAL) and Southwest Airlines (LUV).
"ITA plays a crucial role in online flight search and has been a key driver of competition and innovation in online travel," said Thomas Barnett, Expedia's attorney and former head of the Justice Department's anti-trust division, in a statement. "The Justice Department needs to thoroughly investigate the proposed acquisition and to take whatever action is necessary to prevent harm to consumers in online flight search as well as online travel search more generally.
The coalition apparently is not the only entity calling on the Justice Department to intervene, according to a Wall Street Journal report. Microsoft (MSFT) has also apparently been talking to the DOJ about the Google-ITA deal. The software giant also relies on ITA to power its travel-related searches, noted the Journal.
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Some carriers, the Journal notes, have expressed their concerns privately due to a lack of reassurances from Google. In addition to the carriers, members of the coalition expressed concerns they won't be allowed to renew their contracts, nor receive upgrades to the software, according to the Journal.
Google, however, contends that all of ITA's existing agreements will be honored once the deal goes through, and while it does not explicitly say it will renew those agreements once they expire or offer upgrades, it notes it is "enthusiastic" about adding new partners, according to the company's blog post.
The search giant further notes in its post:
That said, the three most popular travel sites in the U.S. (Expedia, Priceline and Travelocity) use data provided by ITA's competitors. And over the past few months other travel companies have highlighted the alternatives to ITA. Kayak's CEO called Expedia's Best Fare Search alternative "awesome" and Continental Airlines noted that "there are alternatives to the [ITA] shopping solution in the marketplace, both internally and externally.
Google pointed to the support its received from the travel industry for the merger, citing comments from Priceline's CEO, Orbitz and Alaska Airlines, for example.
The deal, which was announced in July, is currently getting a deeper look by the DOJ. Google announced in late August that the antitrust regulators wanted to take a second look at the deal. Typically, in mergers, antitrust regulators look at market dominance and what would happen, as in this case, if one industry titan absorbs another in an adjoining industry and the alternatives that the company's customers would be left with.
A representative from the DOJ was not immediately available for comment.
