1:58pm

Fri April 8, 2011
Business

Google Gets Approval To Buy Travel Search Company

Government officials are letting Google Inc. proceed with its $700 million purchase of airline fare tracker ITA Software, but are imposing significant conditions on the deal.

The purchase will establish the Internet search giant as a key player in the online travel market. ITA gives Google control over the technology that powers the reservation systems of most major U.S. airlines and many popular online fare-comparison services, including Kayak, TripAdvisor and Hotwire.

Robert Birge, chief marketing officer at Kayak, said companies like his were worried about what Google would do with the software.

"Is Google going to continue licensing this to us and continue upgrading the product, or are we going to get a diminished product?" he said. "Essentially owning it could have put them in a position to undermine our product."

That concern and others was enough to cause the Justice Department to conclude that the acquisition would have "substantially lessened competition among providers of comparative flight search websites in the United States, resulting in reduced choice and less innovation for consumers."

Friday the Justice Department said the sale can go ahead, but only because Google has agreed to a series of restrictions.

"What they're really saying here is, as a result of this merger, Google is going to control something that is absolutely essential for competition and can't misuse that control for the detriment of competitors and consumers," Spencer Waller, director of the Institute for Consumer Antitrust Studies at Loyola Chicago Law School, said. "And to ensure that that happens, there's 22 pages of explanation for when, why and how."

Google will be required to license ITA's software to other companies, and it will be prohibited from accessing any proprietary data or technology of ITA customers that resides on or runs through ITA servers.

In addition, the government will monitor Google to ensure it does not engage in anticompetitive behavior. That could include manipulating its powerful Internet search engine to steer consumers to its own services or bury links to rivals far down in its search results — if it uses ITA to enter the online travel business.

The company will be subject to broad requirements to report to government officials on its online travel operations, including travel search and advertising. In addition, the government will establish a forum for complaints about Google's behavior

This could eventually lay the groundwork for a broader investigation by either the Justice Department or the Federal Trade Commission into Google's practices as it expands beyond general Internet search into more specialized markets. The company's search results already highlight some of its own specialized services, including mapping, video and finance.

"It's a major concession on Google's part," said John Lopatka, a law professor at Penn State University who wrote a book about the Microsoft antitrust case.

"They're inviting the government in, because the alternative is for the government to say, 'We're going to oppose this merger. You won't be able to acquire ITA,'" he said.

But there are a lot of people who say this is likely not the last time Google will hear from the Justice Department's antitrust division.

Tom Barnett, former head of that division, says the government filings Friday don't rule out a broader investigation into Google's industry dominance.

"That's a signal that they are continuing to evaluate whether Google may be maintaining a monopoly or extending a monopoly, or acquiring a monopoly in a related market," said Barnett, who now works with Fair Search, a coalition of travel sites that pushed to stop the sale.

The European Commission and the Texas attorney general are currently looking into whether Google manipulates search results to extend its monopoly into other online businesses.

Google has promised it won't sell airline tickets or book other travel arrangements on its own site. Rather, it has said it wants to use ITA to improve its search results for travel — giving consumers more choices and better ways to search for plane tickets. That would enable the company to command higher ad rates from airlines, hotels, rental car agencies and other leisure services trying to reach travelers.

NPR's Tamara Keith contributed to this report, which includes material from The Associated Press. Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.