Google's acquisitions of AdMob Inc. and DoubleClick boosted the search giant's online services while the government held back from challenging its encroachment on competition. But with Google's recent acquisition of ITA Software, online travel agencies (OTAs) are pressuring the US Justice Department to support an anti-trust suit against Google to block the purchase.
In a Bloomberg report, Peter Cook discusses the potential next steps considered by the Justice department regarding the $700 million acquisition.
While the department officials are deliberating, a group of software and online travel companies including Microsoft (parent company of Google's competitor Bing), Expedia and Travelocity have been leading the opposition to challenge Google in court. Collectively, they have formed FairSearch.org as an active forum to critique and highlight concerns that Google could prevent their firms from using ITA's software technology.
Oddly enough, online travel agencies Priceline and Orbitz have been supportive of the deal, siding with Google. The search giant has assured OTAs that the deal would allow it to display flight times and fares in its search results, much the same as Microsoft's Bing is already doing. It has also promised to license the ITA software to all third parties fairly after the acquisition is complete.
In another Bloomberg post, it was reported that Adam Kovacevich, a Google spokesman, declined to comment on the potential suit but made assurances to public that they continue to open to fair trade. “While we continue to cooperate with the Justice Department’s review, we are ultimately confident that this acquisition will increase competition,” he said in an e-mail.
Pamela Jones Harbour, a former member of the Federal Trade Commission believe the anti-trust suit needs to be filed based on the fact Google "is a dominant firm expanding in an adjacent market by ITA, and the effect would be to dominate flight search." Harbour's statements however might be biased as she has consulted with Microsoft in the past. In the Bloomberg report she asserts that this is not the case and her views on the transaction date back to her work as an FTC commissioner.
Steve PociaskOther critics include Steve Pociask, president of the The American Consumer Institute for Citizen Research, a Washington-based nonprofit who is encouraged by the reports of a possible lawsuit.
“Google’s acquisition of ITA would give it dominant control of online travel search, which would lead to less choice and higher prices for consumers.” Steve Pociask, president of the institute, said in an e-mailed statement.
Since the ITA software is used by all the existing OTAs it is curious why none of the big players have decided to develop their own proprietary software to serve their individual needs. By all the major players relying on one service, they appear to have all their eggs in one basket. As such - they might deserve what they get if Google was to change its plans - and actually either open its own OTA or stop issuing licenses to the 3rd parties presently integrated with ITA.
Time will tell on this one - but as much clout as Google has - it is doubtful that even if an anti-trust lawsuit was to be eventually filed, it would effectively block this acquisition. Google, might not be good in some areas (namely social media) but it certainly knows how to fight off major lawsuits.
For more on Google, ITA Software and a history of Google's lawsuits, see some of my previous posts.