Sunday, January 2, 2011;
ITA SOFTWARE is a little-known company that powers online searches for such sites as Kayak, Orbitz and Microsoft's Bing, as well as for American Airlines, among other businesses.
Imagine the discomfort felt by many of these companies when Google announced this summer its intention of buying ITA and jumping into the lucrative market for online travel search. Several have since formed a coalition dubbed FairSearch.org to challenge the proposed acquisition, and they are hoping the Justice Department, which is reviewing the deal, sees things their way.
FairSearch argues that Google could abuse its dominance in online search by giving results from its travel site prominence over those of competitors. Ownership of ITA could also give Google a possible window into proprietary information that companies build into ITA to customize and optimize their searches. Google, they fear, could sabotage competitors by refusing to renew their ITA contracts when they expire. Critics also argue that Google could launch its travel site by licensing ITA technology, just as other companies do.
Google dismisses these concerns and says it has no intention of using its ownership of ITA to interfere with rivals or gain unfair advantage. The company says it wants to buy ITA because of innovations it could achieve that would not be possible under a licensing agreement. Google notes that other companies provide the kinds of services ITA offers. Expedia, for example, uses homegrown search technology; Travelocity is powered by ITA rival Sabre. ITA users, in other words, could switch if they are unhappy or nervous.
The Justice Department must determine whether Google's purchase of ITA could substantially reduce competition. These assessments are factintensive and often made based on the merger's impact on a narrowly defined market. Justice should not confine its review but should also consider the implications of allowing an already formidable Internet power to continue to expand its reach and consolidate its grip over a range of Internet commerce.
This does not necessarily mean that the deal should be quashed. Google gained prominence - and dominance - by providing innovative services to consumers and businesses alike. Its purchase of ITA may very well bring the same benefits to online travel search. But regulators must review the deal closely to ensure that Google's vast power and reach do not unfairly hinder others' ability to compete or deprive consumers of innovations not yet imagined.