Google's travel deal faces regulatory turbulence (AP)
Wednesday, February 16, 2011 4:01 AM
SAN FRANCISCO – Google wants to become the hub of online travel, auspicious meliorate bargains and more convenience by melding the cyberspace see leader's creativeness with the Web's crowning airline-fare tracker, ITA Software.
That has existing online movement sites such as Kayak, Expedia and Travelocity worried that they won't stand a chance of competing, a scenario that could advance to higher fares.
The U.S. Justice Department is due to end presently on whether to permit Google Inc. acquire ITA for $700 million. The care would give Google curb over code that has helped noesis the reservation systems of most field U.S. airlines and a fast of online fare-comparison services for the time decade.
The polity review could help as a test of how aggressively U.S. just regulators impart to personnel Google as the consort uses the riches and impact gained from its ascendency in cyberspace see to modify into another profitable markets. The U.S. market for online movement bookings totals most $80 1000000000 annually, according to Forrester Research.
Google says owning ITA, the brainchild of machine scientists specializing in staged info at the Colony Institute of Technology, would advance to modify prices and more favourable structure to shop for tickets on the Internet. For instance, travelers strength tell Google how such they could give to pay to meet a warm locate on destined dates, and the see engine would invoke into a movement guide.
But critics contend that Google would be healthy to walk another movement services by burying them in its see results or denying them ITA's stylish technical innovations. Google so farther has only promised to honor every of ITA's underway contracts, which suspire over the next few years.
"Google will hit leverage over the whole online grace industry," said Thomas Barnett, a past cheater of the Justice Department's just division. Now an professional in private practice, Barnett represents Expedia Inc., which has banded with such online movement services as Microsoft Corp.'s Bing, Travelocity, Kayak Software Corp. and Farelogix Inc. to rebut the ITA deal.
Google has promised it won't delude line tickets or aggregation another movement arrangements on its possess site. Rather, Google would intend grouping elsewhere to acquire tickets and make reservations for hotels and rental cars. Those sites would acquire commissions.
But competitors feature there is no guarantee on who would intend the traffic. Google, for instance, could simply beam travelers directly to the designated line or hotel and bypass the existing referral and booking services, denying them the commissions.
The online movement companies also fear that Google would locate its possess movement recommendations on the crowning of its important see results page, swing them at a disadvantage.
Google already has been accused of pro its possess services — such as mapping, video and direction — in its see results. The consort says its users favour those services. But dweller regulators and the Texas professional general hit unsealed inquiries into Google's business practices.
As a sign of its influence, Google already fields so some movement requests that its see engine accounts for an estimated 30 proportionality of reciprocation to movement sites. ITA's profession could enable Google to draw an modify large deal of movement searches.
Google, however, seems inferior fascinated in making commissions itself. Rather, it appears to want to meliorate its movement results so that it can retain users and delude more ads. By some estimates, movement advertisers account for most 10 percent, or nearly $3 billion, of Google's period revenue.
The fear is that if Google gets a large deal of movement searches, it would be in a meliorate function to bidding higher ad rates from airlines, hotels, rental car agencies and another leisure services.
More regular searches for air fares would also give Google more insights into when grouping are thinking to movement and how such money they're willing spend. That's accumulation that the consort could delude to advertisers, said Forrester Research movement shrink Henry Harteveldt.
Not every of the deal's opponents rely on ITA. Expedia, for one, uses its possess software, though digit of the company's another movement services, TripAdvisor and Hotwire, depend on ITA. Other field services that don't need ITA allow Travelocity, which uses the Sabre system, and Priceline.
Google believes those alternative tools exhibit there would ease be ample competition if it gains curb of ITA.
But ITA has the most broad database because of its ties to most field U.S. airlines, said parliamentarian Birge, Kayak's honcho marketing officer. ITA also has the best chase grouping to monitor the stylish changes as carriers change their fares, Birge said.
"They hit admittance to accumulation that no digit added has," he said. "They undergo what line way are acquirable at what toll correct now."
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Tessler reportable from Washington.
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Online:
Google's arguments for approbatory the acquisition:
http://www.google.com/press/ita
Travel sites anti the deal: http://www.fairsearch.org
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