Google recently purchased Cambridge-based flight technology company ITA Software for $700 million in cash. Great, you may be saying, but why do I care?
ITA's software powers numerous online flight search engines, including Bing, Kayak, and Orbitz, and counts American, Continental, Southwest, United, and US Airways among its airline customers. It provides the interface these companies use to fetch and display fares, and powers around 65 percent of all online fare bookings. Google's exact intentions for ITA are not known, but it's generally assumed the company wants to utilize ITA's capabilities to build a flight search tool of its own, one that would likely exist within the traditional Google search field and, therefore, interrupt the user path from Google to competing sites.
In effect, Google purchased the technology many other sites use, could combine that technology with its dominance in search to crush the competition, and all the while it would be making money from those competitors because it owns the technology they're using. Google would also have access to sales data from its competitors, which would give it a significant advantage.
Google, for its part, claims the deal will widen competition and simplify the process for consumers. Adam Kovacevich, a Google spokesman, told the Wall Street Journal, "When a user is searching on Google for a flight, we'd like to provide a more useful answer in the form of flight results, just as other search engines do today. We plan on building flight-search tools that will drive more traffic and potential customers to airlines' and online travel agencies' websites." Google says its acquisition will not allow it to corner the market, and, crucially, has no plans to sell tickets itself. This means it will eventually pass users along to a site that does sell tickets.
Naturally, most of the online airfare search business is vehemently opposed to the Google/ITA deal. Yesterday, a group of companies, including Expedia, Inc. (our parent company), Kayak, Sabre Holdings (which operates Travelocity), and Farelogix, launched Fair Search, a slick anti-Google/ITA site designed to frame the deal as a death sentence for competition. Or, to use the group's own words, "FairSearch.org is a group of businesses united in support of a healthy Internet future, where greater consumer choice and economic growth are driven by competition, transparency and innovation in online search."
Opposed companies are primarily concerned about Google's access to data and its ability to direct users to sites that benefit its own business, such as other sites using ITA's technology. There is also fear that Google may not renew existing contracts with ITA. So far, it has only pledged to honor current contracts.
Needless to say, the Department of Justice is in the midst of what figures to be a lengthy antitrust review.
Whither the Consumer?
Let's be honest: Any opposition to the Google/ITA deal is based primarily on money. Players in the flight search business would rather Google stayed out of it, and just keep sending users their way. And current ITA customers certainly aren't eager to purchase technology from a rival.
But consumers have a lot at stake in the battle. To paraphrase Fair Search's mission statement, this is, at its heart, an issue of consumer choice and transparency. What's less clear is which outcome serves consumers better.
Consider the current environment: Multiple sites offering more or less the same fares, and each trying to differentiate itself as a way of securing customer loyalty, like our sister site TripAdvisor and its fees estimator or Expedia, Travelocity, and Orbitz eliminating fees. But finding a lowest fare once on one site doesn't mean consumers will always find the lowest fares on that site, and comparing findings between these sites is a project, especially when searching across a broad range of dates. Are consumers really better served by this smattering of lookalikes?
There is clearly an opportunity for something better. By leveraging its dominance in the search business, Google has an opportunity to streamline fare shopping for the masses. If Google unveils an innovative new search tool, and treats its competitors fairly, the outcome could be a big win for consumers looking for a truly one-stop shop for fare comparisons.
But that's a big, unsettling "if." As a consumer, I'm curious about what new ideas Google has up its sleeve, and I believe it could change things for the better—but I'd be lying if I said the combination of Google's powerful search engine and ITA's ubiquitous airfare technology poses no risk to transparency, choice, and, ultimately, our wallets.
Readers, do you think a Google flight search product would be good for consumers, or is there too much at risk?