July 4th, 2010

The $700 Million Travel Search Deal And Google's Shift In Strategy

Last Thursday, Google placed a major $700 million bet on a new strategy. It announced an agreement to purchase ITA Software, a leading provider of flight information (fares, schedules, availability) to most of the key online travel sites, travel search engines, and airlines. ITA’s existing customers include Bing, Orbitz, Kayak, Expedia’s Hotwire, Continental, US Airways, American Airlines, and Southwest.

Google was careful to note that it would “honor all existing agreements.” Indeed, if Google wants the deal to pass regulatory antitrust scrutiny, one requirement will very likely be a prohibition, or at least a promise on Google’s part, not to cut off ITA’s flight data to the competition. This deal is not primarily about denying other travel search sites access to this data. Rather, it signals a much more subtle and profound strategy shift for Google—towards more customized search experiences in different categories, starting with travel.

In other words, it is moving in the same direction as Bing, which has built out vertical search across not only travel, but also health, shopping, local, and, most recently, entertainment. To put this deal in perspective, it is roughly the same size as the $750 million AdMob deal, which represents Google’s entry into mobile search. Drilling down into different categories of search could be just as important to Google as mobile search. → Read More

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