Google Sees Big Picture, Gladly Risks Anti-Trust Woes to Buy ITA
Google (GOOG) announced yesterday it will pay $700 million for ITA, one of the dominant providers of air travel flight information software. These days, the search giant doesn't seem happy unless it's got some kind of anti-trust issue on the table. The purchase puts Google in charge of the database currently used by competitors like Microsoft (MSFT), and is sure to come under regulatory scrutiny. But that complication is worth it to Google, which has big plans for ITA.
As it did with the Ad-Mob deal, Google has created a propaganda site to bolster its case. "The acquisition will benefit passengers, airlines and online travel agencies by making it easier for users to comparison shop for flights and airfares and by driving more potential customers to airlines' and online travel agencies' websites," it states. I thinks it's disingenuous for Google to claim that buying ITA will help drive more customers to other businesses. Google intends to keep users on its site longer by offering shoppers a suite of tools that would enable them to compare prices, times, and connections. Only once customers have settled on a ticket will they be directed to a third party site to finish the transaction.
A large part of this purchase is a direct challenge to Bing, which is taking on Google's more traditional link-based search by positioning itself as a "decision engine." As veteran tech scribe Stephen Levy wrote in his recent profile of Google search algorithm,
"Team Bing has been focusing on unique instances where Google's algorithms don't always satisfy. For example, while Google does a great job of searching the public Web, it doesn't have real-time access to the byzantine and constantly changing array of flight schedules and fares. So Microsoft purchased Farecast -- a Web site that tracks airline fares over time and uses the data to predict when ticket prices will rise or fall -- and incorporated its findings into Bing's results. Microsoft made similar acquisitions in the health, reference, and shopping sectors, areas where it felt Google's algorithm fell short."The last sentence from Levy might help to answer a big question: why would Google bother to purchase ITA, and risk incurring anti-trust scrutiny, when it could simply pay for ITA's services like everyone else? Google will have to be very careful not to use its position as parent company to gain an unfair advantage in the travel sector, at least for a while. But ITA's software and engineers will provide valuable insight and support as Google looks to extend this model into other sectors where delivering simple web links is no longer enough.
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