Google deal: what it means to consumer and online travel providers

No travel industry topic has aroused as much speculation as Google’s proposed acquisition of ITA Software, which provides product for many airfare and travel search websites. But its ultimate impact on consumers? It depends but probably not as much as initially speculated.
 

Columnist Christopher Dawson says the $US700 million acquisition will mean convenience for consumers. He thinks it will be good for consumers because the “travel sites that want to survive are going to have to start getting creative. We’re doing to see more value adds to draw us to Expedia rather than simply Googling our next air travel requirements.”
 

One major impact is on the somewhat rigid structure that has governed travel search from the very beginning.
 

“The true opportunity to create new value lies in Google’s sophisticated ability to process text along with price,” Jeff Huger, Google’s senior vp, said of the company’s intentions to integrate ITA Software’s capabilities.
 

“Google’s goal is to have you search for things like ‘flights to the beach for under $500 in June’ and then be able to give you real-time, relevant results. With ITA Software’s technology under their belt, they’d be able to do just that,” writes Hot Hardware
 

A group of travel companies that created FairSearch opposed the acquisition, claiming it would not only harm their operations but also cost consumers more. Their fear was that Google would use its new subsidiary to gain an unfair advantage in online travel search engines.
 

But the Justice Department’s approval after ninth months of deliberation included stipulations that Google must continue to develop ITA’s software and license it out to rivals should deal with those concerns, writes Reuters columnist Robert Cryan.
 

A Kayak executive praised the Department of Justice’s decision.
 

“It imposed on Google a set of conditions that analysts, and the online travel industry, consider tough. The terms govern how the search leader uses and licenses ITA’s travel technology,” said Investors.com.
 

Moreover, Google agreed to let the government track its compliance for five years.
 

”Analysts say the five-year monitoring clause could, if need be, form the basis of a larger antitrust review in the future,” according to Investors.com.
 

Google’s acquisition gave the “metasearch business model the highest risk of being trampled by Google’s integration of pricing,” but that it was “far too early to ring the death knell for companies like Kayak,” writes Carroll Rheem, director of research at PhoCusWright. “To be a true game changer, Google’s travel offering must systematically lead users to better and easier decisions, which is a very tall order.”
 

She writes that much depends on how Google chooses to approach the user experience. Since online travel providers are huge advertisers with Google, there is incentive for the company to keep online providers healthy.
 

“The US government’s agreement to allow Google to buy Internet travel programmer ITA Software — with a few sensible restrictions — is just the appetizer,” writes Cryan, a Reuters Breakingviews columnist. “The main course in the extended meal shared by Washington and Silicon Valley will be control of the huge markets for broad Internet search and mobile operating systems.”
 

By David Wilkening