Wall Street Journal
By THOMAS CATAN
October 25, 2010
WASHINGTON-Several popular online travel companies are joining forces to oppose Google Inc.'s proposed $700 million purchase of ITA Software Inc., the leading provider of flight data, saying the deal would give it too much sway over the travel sector.
Expedia Inc., Kayak.com, Sabre Holdings and Farelogix Inc.-which operate half-a-dozen leading online travel sites-are forming a coalition called FairSearch.org to persuade the Justice Department to block Google's latest deal.
The companies are also launching a lobbying blitz on Capitol Hill, making the case to members of Congress that the deal would allow Google to dominate the online air-travel market by giving it control over the software that powers many of its rivals in the travel search business.
Google responds that buying the service will help it provide more useful information to consumers when they search for flight data.
But opponents of the deal worry that Google could limit access to ITA's software, which is used by many of the flight-comparison sites operated by the members of the newly formed coalition. Expedia also runs Hotwire and TripAdvisor. Sabre runs Travelocity, while Kayak runs SideStep in addition to Kayak.com.
Separately, Microsoft Corp. has also opposed the deal in conversations with Justice Department investigators and lawmakers. Its search engine, Bing, relies on data from ITA to power travel searches.
Overall, ITA's software handles about 65% of direct, online air-travel bookings for airlines, the company says. ITA declined to comment.
Opponents of the deal also highlight what they say is Google's power over an ever-expanding array of businesses as it reaches into sectors from broadband Internet to mobile telephony and now travel. They cite figures from Experian Hitwise showing that Google is the source of more than 30% of all search engine traffic to online travel sites-and could direct that traffic its own way.
"Google has tremendous power in the search market, and it gives Google the ability to steer users in directions that are best for Google," Expedia's counsel, Thomas Barnett, said in an interview. "All of that would ultimately end up harming consumers."
Mr. Barnett blocked Google's proposed advertising deal with Yahoo Inc. when he headed the Justice Department antitrust division during the administration of George W. Bush.
Not everyone in the $80 billion online travel sector opposes the deal. Some, such as Priceline, Travelport and Orbitz, have offered qualified support. Airlines have generally remained cagey about the deal. But some have signaled their concern privately, saying they haven't received assurances they have sought from Google.
Google says its purchase of ITA won't allow it to corner the market on travel searches. It points to several other companies that provide airline travel data and says it doesn't plan to sell tickets itself. Google also promises to honor all of ITA's existing contacts.
"When a user is searching on Google for a flight, we'd like to provide a more useful answer in the form of flight results, just as other search engines do today," said Adam Kovacevich, a Google spokesman. "We plan on building flight-search tools that will drive more traffic and potential customers to airlines' and online travel agencies' websites, and so we've been encouraged by the support this deal has received from the online travel industry."
Rivals say that Google's promises are hollow. They say that no other company can replace ITA's service and that Google hasn't committed to renewing their contracts or passing along any upgrades. They also fear that Google could analyze their use of ITA's data to gain an insight into their own proprietary systems for competitive reasons.
"We have raised those concerns with both ITA and Google separately through multiple requests," said Robert Birge, chief marketing officer of Kayak. "Those requests have been explicitly denied, signaling their intent."
The online travel companies question why, if it doesn't intend to keep ITA's data to itself, Google decided to buy the company instead of simply becoming another client. Google says the purchase will allow it to more fully integrate ITA's data, creating more innovative products that will benefit the consumer.
The Justice Department is conducting an extended antitrust review of the deal, which was unveiled in July.
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