The U.S. Justice Department has granted its approval to Google’s planned $700 million acquisition of travel software maker ITA. However, the approval comes with some conditions attached, including a provision that Google is required to license ITA software, continue development of ITA’s next-generation “InstaSearch” service, and establish firewalls and in-house procedures to protect ITA users’ proprietary information and prevent Google from mining it for competitive advantage.
“The acquisition, as originally proposed, would have substantially lessened competition among providers of comparative flight search Web sites in the United States,” the Justice Department noted in its statement. As such, the DOJ has sued to block the acquisition. However, the agency’s approval of the deal is in the form of a proposed settlement to that suit. If Google agrees to the terms and the court approves, Google can go ahead with the acquisition.
“The proposed settlement assures that airfare comparison and booking websites will be able to compete effectively, providing benefits to consumers,” said the DOJ’s deputy attorney general for antitrust Joseph Wayland, in a statement.
Google announced its intention to acquire ITA back in mid-2010 and immediately sparked a furor in the travel industry. Google announced that acquisition as part of its intention to launch a new flight-search and travel booking service; however, since ITA develops booking and reservation system used by many of the worlds major travel services and airlines, almost the entire industry cried foul over the deal. By acquiring ITA, they argued, Google wouldn’t just be another player in the travel booking market: it would have access to the vast majority of reservation data from the industry, giving it an unfair advantage. Further, Google could decide to cut competition off at the knees by refusing to sell or renew licenses for ITA software.
Under the DOJ’s approval of the deal, disputes between Google and online travel Web sites will have to be settled by mandatory third-party arbitration, and Google will be required to adhere to a formal reporting mechanism for complainants if Google acts in an unfair manner. Google is also barred from entering into agreements with airlines that would prevent them from sharing seating and booking information with competitors.
Google seems thrilled with the settlement terms. “We’re moving to close this acquisition as soon as possible, and then we’ll start the important work of bringing our teams and products together,” wrote Google senior VP for commerce and local Jeff Huber in Google’s company blog. “We’re confident that by combining ITA’s expertise with Google’s technology we’ll be able to develop exciting new flight search tools for all our users.
The settlement must still be approved by Washington D.C.’s U.S. District Court.