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DOJ: Google Allowed to Buy Fare Search Firm

By Stuart J. Johnston
April 11, 2011

The U.S. Department of Justice (DOJ) has opened the way for search giant Google to purchase the leading supplier of flight search technology -- but not without some serious restraints on Google's use of the technology and of flyer data.

Oddly, the settlement between the DOJ and Google (NASDAQ: GOOG) resulted in the government's antitrust regulators first filing an antitrust suit to block the purchase of ITA Software, followed by filing a proposal of how such a sale could be implemented in a fair manner.

If the proposed settlement is approved by the courts, Google's purchase will go through, according to a statement from the DOJ, Friday.

Among the terms of the settlement, Google commits to continuing to develop ITA's flight search and booking technology and to make it available at reasonable licensing rates to competitors.

"Google will also be required to further develop and offer ITA's next generation InstaSearch product to travel websites, which will provide near instantaneous results to certain types of flexible airfare search queries," the DOJ's statement said. InstaSearch is currently under development at ITA.

The company will also be required to ensure that there will be no unauthorized use of competitive data collected from ITA customers.

Google first announced its intention to acquire ITA in early July for approximately $700 million in cash.

Google predicted at the time that it would face tough scrutiny from government antitrust examiners, particularly in the U.S., given that most of the Web's fare search sites run on ITA's software, including Microsoft's Bing.

The majority of the largest fare search sites started an organization to raise issues with the proposed purchase. Dubbed FairSearch.org, the group includes Expedia Inc., and its brands Expedia.com, Hotwire and TripAdvisor; Farelogix Inc.; KAYAK, and its brand SideStep; and Sabre Holdings, and its brand Travelocity.

Microsoft, which founded and later sold Expedia, joined FairSearch.org in December.

"Microsoft is joining FairSearch.org to help raise awareness of how the proposed Google-ITA merger could hurt travelers by slowing innovation and contributing to higher travel costs," a Microsoft spokesperson said in an e-mail to InternetNews.com at that time.

Obviously, the proposed settlement cheered Google.

"We're excited that the U.S. Department of Justice today approved our acquisition," Jeff Huber, senior vice president for commerce and local, said in a post to the Official Google Blog.

Calling it a "clear winner for consumers," FairSearch.org issued a statement Friday endorsing the settlement deal.

"The Department concluded Google's unrestricted control over ITA's key flight search technology would have violated the antitrust laws. By putting in place strong, ongoing oversight and enforcement tools, the Department has ensured that consumers will continue to benefit from vibrant competition and innovation in travel search," the FairSearch.org statement said.

A Microsoft spokesperson declined to comment regarding the settlement.

Stuart J. Johnston is a contributing editor at InternetNews.com, the news service of Internet.com, the network for technology professionals. Follow him on Twitter @stuartj1000.