Google leapfrogs into online travel sector

05 July 2010

MOUNTAIN VIEW, California: Google, the search giant, is set to acquire software firm ITA, in a move that catapults the company into the heart of the $80 billion (€63.5bn; £52.7bn) online travel business.

The takeover is worth some $700m, and constitutes the third largest purchase made by Google in its 12 years of existence.

It will enable the internet pioneer to build tools that provide comparative information on flight times, ticket availability and prices, services which are widely used by travel agents at present.

Many airlines also utilise the technology created by ITA – which was founded by scientists at MIT in 1996 – to maximise the yield from sales of their seats.

Eric Schmidt, Google's chief executive, refused to rule out the possibility that the organisation would choose to sell tickets, but suggested it was among the "less likely" options under consideration.

"I think it's unlikely that anything we do will look very much like what's available today," he added.

Analysts argue that Google's primary goals will include boosting its share of online enquiries in this sector, and thus to heighten its proportion of category adspend.

Critics fear that Google may exploit its dominance of the search market to direct traffic to its own business, or to increase licensing fees to rivals reliant on ITA's software.

In just one example of how this might play out in practice, Bing, Microsoft's "decision engine", has employed ITA's system to offer travel data to netizens.

ITA had attracted attention from operators such as Expedia and Kayak, but most were denied access to relevant financial information because of its exclusive talks with Google.

Google said it would "honour all existing agreements" and added it was "enthusiastic about adding new partners" to this venture.

The company's buy-out of ITA comes hard on the heels of its $750m purchase of AdMob, the mobile ad network.

That deal was scrutinised by federal anti-trust regulators before being approved earlier in 2010.

Data sourced from Wall Street Journal; additional content by Warc staff