Google has just come close to winning approval from the U.S. Justice Department of its $700 million acquisition of travel software company ITA. Google has been embroiled in an investigation by the Justice Department over the search giant’s acquisition of the travel software company, which provides a management system for airfare pricing and shopping services. Despite intense scrutiny and opposition from competitors, the deal appears to be on its way to being approved, if Google complies with the DOJ’s proposed settlement. Read our coverage here for background on the investigation.
This settlement requires that Google develop and license travel software, to establish internal firewall procedures and to continue to fund software research and development in the industry. Interestingly, The DOJ also filed an antitrust lawsuit at the same time they filed a proposed settlement, in case Google doesn’t agree to the settlement terms. But according to this Google blog post, the search giant seems to be ready for the acquisition to close. The key takeaway is that if Google doesn’t settle, the DOJ says that the acquisition, as originally proposed, is anti-competitive.
According to the settlement, Google will be required to continue to license ITA’s airfare search software to airfare websites on commercially “reasonable terms.” Google will also be required to continue to fund for that software at similar levels to what ITA has invested in recent years. Google will also be required to further develop and offer ITA’s next generation InstaSearch product, which is currently in development, to travel websites, which will provide near instantaneous results to certain types of flexible airfare search queries.
Additionally, Google will be have to implement firewall restrictions within the company that prevent unauthorized use of competitively sensitive information and data gathered from ITA’s customers. Basically, they want to create a wall within Google so that one part of the company doesn’t leak information to the other part.
Google is also prohibited from entering into agreements with airlines that would inappropriately restrict the airlines’ right to share seat and booking class information with Google’s competitors. Lastly, the settlement provides for a formal reporting mechanism for complainants if Google breaks any of these terms.
As we’ve written in the past, the ITA deal represents a huge shift in strategy for Google and a substantial new revenue channel for the company. I have a feeling Google will agree to the DOJ’s terms.
UPDATE: Here is ITA’s statement on the news: Today we are extremely pleased with the DOJ’s decision to clear Google’s acquisition of ITA. We will begin work immediately to close the acquisition, and are committed to making the integration process as seamless as possible for our employees and customers. We are excited about joining forces with Google, and look forward to getting our teams together after close to start working on innovative new ways to make travel search easier.
ITA Software is an airline IT and services provider at the forefront of a new generation of technology that is changing the way the travel industry works. Combining advances in computer science, innovative problem-solving, and deep industry knowledge, the companyâ€™s solutions deliver improved power and flexibility to the travel industry and greater efficiency for airlines, travel distributors, and passengers.
Google provides search and advertising services, which together aim to organize and monetize the world’s information. In addition to its dominant search engine, it offers a plethora of online tools and platforms including: Gmail, Maps, YouTube, and Google+, the company’s extension into the social space. Most of its Web-based products are free, funded by Google’s highly integrated online advertising platforms AdWords and AdSense. Google promotes the idea that advertising should be highly targeted and relevant to users thus providing...