Google-ITA Rewards Orbitz and Undercuts Merger Opposition at the Same Time

Last Updated Feb 8, 2011 7:04 PM EST

Google's (GOOG) acquisition of ITA Software has been under federal scrutiny on concerns that it will hurt competition. This week, Orbitz signed an agreement to extend its license of ITA's technology through 2015. This move hurts the anti-acquisition argument, though you'd hardly know it from their response.

ITA Software has technology that provides the best fare and seat-availability search in the market today. That's why you see all different kinds of third-parties licensing the technology. The technology is so good that airlines like US Airways (LCC) and American (AMR) have used ITA's engine to power flight search on their very own websites. ITA also provides the technology to online travel agents and metasearch sites like Orbitz and Kayak.com.

Bring in da noise
The airlines have been mostly silent on the acquisition, but those third party sites have been making a lot of noise. In fact, sites including Kayak, Travelocity, and Expedia (but not Orbitz) have come together to form FairSearch.org, a group opposed to a Google strategy that supposedly "threatens online competition, innovation and economic growth."

The argument is that Google will keep ITA's technology to itself and refuse to share it with other sites who rely on it to provide a competitive marketplace for consumers. Theoretically, if Google decided to cut off all licensing deals, then it could become the only place to find these superior search results online.

There are a few holes in that argument. First of all, those licensing deals make a ton of money for ITA, so I'd be surprised to see Google cut them off. And if Google did cut them off, that would create tremendous momentum, unlike anything we've seen up to now, for an alternative way of providing this information to consumers.

Now that ITA has cut a deal with Orbitz to extend its technology license through 2015, that should help squash some of the anti-acquisition arguments. Orbitz has been neutral on this deal, so ITA is likely rewarding Orbitz for its stance, but the fact remains that at least one third party will have the technology available through 2015. Could Google cut off Orbitz after that time? Sure. But if you can't come up with a competitive technology in the next four years, you're not trying hard enough.

Now you're really stretching
So now, FairSearch.org has focused on the idea that ITA will continue to make its current technology available to license partners but will focus all future development on an alternate platform that it will keep to itself.

In an interview with the travel tech website Tnooz, Orbitz said this:
ITA will provide the Company with access to the most up-to-date functionality related to QPX that ITA makes generally available to all of its customers.
In this statement, FairSearch.org sees a gaping hole. It's that clause about functionality that "ITA makes generally available" that has the FairSearch people suggesting that there's a plot to keep future functionality to itself and not make it "generally available."

We of course can't know if that's true or not without getting into the minds of Google people and that's not going to happen. But what we do know is that this new deal with Orbitz only weakens the anti-acquisition argument by showing that at least one outlet besides Google will at least have ITA's technology for the next several years.

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  • Brett Snyder

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