Travel industry running scared from Google
Wednesday 30 June 2010
Google's talks to buy ITA Software, an airline IT and services provider, has travel executives worried that the search engine giant could wield too much power in their industry.
Cambridge, Massachusetts-based ITA is a major source of information about airfares to the industry, used by a slew of airlines, travel agents and other sites, including AMR Corp's American Airlines, Continental Airlines, Hotwire, Kayak, Orbitz and Microsoft Corp's Bing.
The concerns are so real that Kayak offered to buy ITA to keep the company out of Google's hands, a travel industry source close to the situation said.
Kayak was being backed by Expedia Inc, which would have injected under $200 million into Kayak to make a deal happen, the source said.
But the talks went nowhere as Google was in exclusive talks with ITA, the source said, requesting anonymity because the person did not want to be named talking publicly about the search giant.
"We are going to watch the potential to abuse dominance," said Robert Birge, Kayak's chief marketing officer, declining to confirm or comment on his company's bid for ITA. "They have dominance on the general search side. When you couple that with ITA's airline relationships there is reason to be concerned."
"We have definitely heard from other folks, including on the agency side and on the supplier side. They are concerned," Birge said.
Google declined to comment. ITA was not immediately available for comment.
The concerns center around how Google might combine its dominance in the general search business with ITA's strengths in the travel sector. ITA, for instance, provides data from its airline searches to others, including Kayak, Birge said.
"What if they decided to stop providing that data? What if they only provided that data to the parent company? What if they provided better data for those airlines to their parent company?".
Some industry executives would like to see Google give assurances that it would not link using ITA to its general search results, the industry source said.
"They would have to commit that the two sides of the business don't talk to each other essentially," the source said.
They would also like Google to commit to not "dumping" the services of ITA at lower prices than others could afford, the source said.
Industry executives are expected to voice their concerns if a deal is announced and the Federal Trade Commission reaches out to them for comments, the source said.
Not everyone in the industry is worried, though. Last month Priceline Chief Executive Jeffrey Boyd was cited by Tnooz, a travel industry-focused publication, as saying an acquisition by Google would help if it resulted in their getting better leads to customers.
Indeed, the travel industry source said Google had been careful about antitrust concerns and if they "keep behaving the way they behave today, I don't think it will be a big issue."
But the potential for abuse remains a concern.
"It is in a position, because of its search dominance, to control all of these travel sites that have been using ITA," said Gary Reback, a lawyer at Carr & Ferrell, referring to Google. "It can boost its own travel over anybody else, by using the power of its now vertically-integrated search engine and on top of that gets access to data it didn't have before."
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