Posted: April 2011
Last year, Google signed an agreement to buy ITA Software, Inc., a flight information software company, for $700 million in cash. ITA’s software tool allows organizing flight information and is used by leading airlines and travel distributors worldwide. With the recent approval by The Department of Justice, websites like Kayak and Bing Travel, must have felt like the sky was falling.
Here is part of Google’s announcement
- “How cool would it be if you could type “flights to somewhere sunny for under $500 in May” into Google and get not just a set of links but also flight times, fares and a link to sites where you can actually buy tickets quickly and easily? Well that’s exactly why we announced our intention to buy ITA Software, a Cambridge, Mass.-based company that specializes in organizing airline data last July—and we’re excited that the U.S. Department of Justice today approved our acquisition.”
As part of the approval, the DOJ said that the settlement with Google will “protect competition for airfare comparison and booking websites” and allow ITA to “power their websites to compete against any airfare website Google may introduce.”
Even in its own announcement, Google states:
- “It’s important to us that ITA continue with business as usual, providing great service to its business partners. We indicated last July that we would honor ITA’s existing contracts. Today we’ve formally committed to let ITA’s customers extend their contracts into 2016. We’ve also agreed to let both current and new customers license ITA’s QPX software on “fair, reasonable and non-discriminatory terms” into 2016—along with related commitments aimed at making ITA’s technology available to other travel sites.”
For consumers, I believe that this acquisition will be a good thing. Kayak and Microsoft will be forced to work harder to maintain their share of the market as well as improve their product. I would imagine that improved pricing and travel packages will follow.
For web related companies, I think that an important lesson can be learned. If your company has developed a unique product or you are very successful in a niche market and people find you by searching on the web understand that Google is watching. It is likely, the more successful you become Google will either attempt to purchase you (i.e. Groupon) or they will purchase a similar product to compete with you (i.e. ITA) Remember, Google’s greatest asset is the data it culls from the millions on online searches done on its site each day. You can be sure if it happens on the web they know about it.
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