With Google (Nasdaq: GOOG) about to face off against the US Dept of Justice over its planned acquisition of travel software developer ITA Software for $700 million, know that the fight may be high stakes, but the loser in this battle royal could be you.
You probably don’t know about ITA, but you’ve already see its handiwork -- Kayak,
Orbitz, and Microsoft Corp. (Nasdaq: MSFT)'s Bing are three players that depend on ITA, which is widely viewed as having one of the industry’s best set of tools for gathering airfare and flight data. And Microsoft, Expedia, Kayak, and a few other travel heavyweights recently banded together to form FairSearch.org
to lobby against the Google acquisition.
But, frankly, nobody saw serious US Department of Justice opposition until late last week when both The Washington Post and Bloomberg posted articles suggesting the acquisition is in “trouble,” that the DoJ could “ground” the deal.
And that left many observers scratching their heads. “I am very surprised to hear about DoJ’s opposition,” said Jeffrey Breen, president of airline consultancy Cambridge Aviation Research.
Historically, it is uncommon for the DoJ to seek to block an acquisition where two companies are in different businesses; and Google has no footprint in airfare data.
And there are other reasons the DoJ opposition is puzzling.
Google, notes Robert Cole, founder of travel technology consulting firm RockCheetah, has insisted it has no interest -- zero -- in using ITA’s databases of air routes and fares to put itself into the travel booking business. “I take them at their word on this,” says Cole. Online travel booking, à la Expedia, is labor intensive; and Google has never shown any appetite for entering such businesses.
Google has also said it has no interest in taking ITA data private. Indeed, what it apparently wants to do is use ITA results to power more transparent searches into airfares -- and this could be a boon to us all.
A reality: The current online booking systems for airfares are extraordinarily inefficient, Cole contends. ”The typical leisure traveler searches 22 sites across 10 sessions when planning a trip.”
Google’s entry just might produce easier, faster bookings. So seeking to block the ITA acquisition seems against the interests of travelers.
Even worse, the current system is showing signs of disintegration. The big airlines are beginning to attack the leading online travel agencies. The main brawl pits American Airlines against Orbitz and Sabre. American has pulled its flight data from Orbitz, and Expedia has pulled American data in a show of solidarity. Sabre, a travel data supplier mainly serving travel agents, in turn declared it would downgrade American data, making those flights less visible. American fired back with a lawsuit.
What does American want? It definitely wants out of fees paid to third-party agencies, but this brawling is pushing the current system nearer to blowup.
Bottom line: To call the present system broken is to be kind. Airlines despise it, consumers find it clunky, and almost nobody thinks it cannot be done better. Why DoJ would apparently want to preserve it is a puzzlement.
And that is also why the Google-ITA merger is in the interest of just about all of us. Google’s entry might produce a smoother stream of flight data; already there are signs the airlines are smiling on ITA. American, for instance, last week inked a deal with ITA whereby the software house will produce new tools for American to manage its flight data.
Is there no way out of the Google/DoJ collision? Brooklyn Law School professor Jonathan Askin believes there is: “Extracting a few publicly beneficial commitments from Google for approval for the ITA Software acquisition is probably a sufficient alternative to outright blocking of the merger.”
The DoJ might extract guarantees of continuing access to ITA data for the online travel agencies such as Expedia. Experts say that should be easy to get Google to commit to, because these companies pay ITA for its data and are the primary source of ITA cashflow.
What’s not to like about that?
The skies just might be a little friendlier -- and a lot easier to navigate -- with Google offering us all large doses of ITA data for trip planning.
— Robert McGarvey is a widely published author and expert on social media.