Google Close to Government Clearance to Buy Online Travel Company, With Strings Attached

By Tracey E. Schelmetic April 08, 2011

Google could receive government clearance as early as today to buy airline fare tracker ITA Software in a $700 million deal that could make the search leader the hub of online travel, according to sources—but there may be government-sized strings attached to the approval.

Although talks are ongoing and could still fall apart, reported the Associated Press, Google appears close to a deal with the Justice Department on an agreement that would let it buy ITA. However, it's likely that Google will have to also accept government conditions to protect other companies in the travel industry from falling victim to Google's domination over airline fare search.

As Google grows larger, it's clear that the former freedom the company had from attention from U.S. antitrust regulators is largely over. It appears that antitrust entities intend to police the company a lot more closely as the company uses the wealth and influence gained from its dominance in Internet search to expand into other markets, said the AP article.

The acquisition of ITA is expected to give Google full control over software that powers the reservation systems of most major U.S. airlines and many popular online fare-comparison services, including Kayak, TripAdvisor and Hotwire. Many competitive travel sites (and their corporate owners) have filed complaints to try and block the purchase of ITA by Google.

Google, for its part, has said it wants to use ITA to improve its search results for travel — giving consumers more choices and better ways to search for plane tickets. That would enable the company to command higher ad rates from airlines, hotels, rental car agencies and other leisure services.

Rivals fear that Google could use ITA to build its own online travel service and then use its control over Internet search to steer consumers to that service while burying competing sites further down in its search rankings. The person said Justice Department officials might subject Google to government oversight to ensure that the company does not favor its own travel products and services in its search results.

Companies that rely on ITA also fear that Google could deny them access to the software, particularly as it introduces upgrades. Google so far has only promised to honor all of ITA's current contracts, which expire over the next few years. They also worry that Google could use its control over ITA to get access to their proprietary technology.

Justice Department officials are therefore considering conditions that would require Google to license ITA software to rivals and prohibit it from gaining access to other companies' technology, the person said.

News that an agreement was close was reported earlier by The Washington Post.

As Google gets bigger, it draws more regulatory attention. The European Commission and the Texas attorney general are currently looking into whether Google manipulates search results to extend its monopoly into other online businesses.

Earlier this week, it was reported that Google is revamping its privacy policy following a rebuke by the FTC: the company has agreed to settle over the charges that it used deceptive tactics and violated its own privacy promises to consumers when it launched Buzz, a social networking feature inside Gmail. The settlement bans Google from “future privacy misrepresentations” and requires the company to implement a comprehensive privacy program. To make sure Google is complying with the settlement, the FTC said it plans to order regular, independent privacy audits for the next 20 years.

Tracey Schelmetic is a contributing editor for TechZone360. To read more of Tracey's articles, please visit her columnist page.

Edited by Janice McDuffee

TechZone360 Contributor

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