Microsoft doesn't like Google's plan to acquire ITA Software. In fact, the software giant is taking issue with it publicly by joining the FairSearch.org coalition. Microsoft is the latest to join the effort, which was launched in October to support competition, transparency and innovation in online search.
Microsoft will join FairSearch.org in urging the U.S. Justice Department to challenge Google's proposed acquisition of ITA, the flight-search technology that powers many of the web's most popular travel sites. Foundem, Level...com (levelfrance.com), and Zuji have also joined the coalition. Existing members include Expedia, Farelogix, Kayak and Sabre Holdings, which owns Travelocity.
"Competition in online travel search over the last decade has not only created more choices and innovation for travelers, but has also driven prices lower around the world for consumers," said Roshan Mendis, president of Zuji. "We are concerned that less competition in flight search in the U.S. will result in less innovation in travel search globally, and, more importantly, less pressure on travel service providers to offer the lowest price for consumers regardless of where they are located."
Too Much Control?
ITA provides the technology behind 65 percent of all online flight searches at airline web sites in the U.S., and its flight search software powers six of the top 10 air carriers in the U.S. ITA customers include American Airlines, Continental Airlines, Hotwire, KAYAK, Orbitz, Southwest Airlines, TripAdvisor, United Airlines, US Airways, and Virgin Atlantic.
Google offered $700 million in cash for ITA Software in July. At the time, Google said the acquisition would 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' web sites. Google also said it would honor all existing agreements with ITA clients, and the deal would not change existing market shares because the company doesn't currently complete against ITA.
But FairShare.org contends the acquisition would give Google control over the software that powers most of its closest rivals in travel search and could enable Google to manipulate and dominate the online air travel marketplace. The end result, the group argues, could be higher travel prices, fewer travel choices for consumers and businesses, and less innovation in online travel search.
FTC Challenge Looming?
When the deal was announced, Greg Sterling, principal analyst at Sterling Market Intelligence, predicted Google would have to wade through regulatory approvals, which could take months. He also predicted that, in some ways, getting approval for the ITA acquisition could be more difficult than the AdMob deal.
According to Experian Hitwise, Google is the source of more than 30 percent of all search traffic to online travel sites, delivering more visitors than any other search engine, the primary way Internet users navigate to U.S. industries online. Google is also the dominant provider of online search, controlling more than 70 percent of U.S. searches.
"Microsoft has long been involved openly and behind the scenes in trying to thwart some of Google's biggest takeover attempts, including DoubleClick and AdMob," Sterling said. "It's no surprise that the company joined this group. And I would bet the deal will be challenged by the [Federal Trade Commission], though we'll have to see."