Google and Government Close on Travel Deal

Oxford, MS 4/7/2011 (Penny PayDay) -- Google Inc. could receive government clearance as early as Friday to purchase airline fare tracker ITA Software in a $700 million deal that could make the search leader the hub of online travel, according to a person with knowledge of the matter.

Although talks are ongoing and could still fall apart, Google appears close to a deal with the Justice Department on an agreement that would let it buy ITA. Google must accept government conditions to protect other companies in the travel industry, the person said. The person was not authorized to discuss the review and spoke on condition of anonymity.

The government review of the deal has been seen as a test of how aggressively U.S. antitrust regulators intend to police Google as the company uses the wealth and influence gained from its dominance in Internet search to expand into other markets.

The acquisition would give Google control over software that powers the reservation systems of most major U.S. airlines and many popular online fare-comparison services, including Kayak, TripAdvisor and Hotwire.

Google has said it wants to use ITA to improve its search results for travel -- giving consumers more choices and better ways to search for plane tickets. That would enable the company to command higher ad rates from airlines, hotels, rental car agencies and other leisure services.

Rivals fear that Google could use ITA to build its own online travel service and then use its control over Internet search to steer consumers to that service while burying competing sites further down in its search rankings. The person said Justice Department officials might subject Google to government oversight to ensure that the company does not favor its own travel products and services in its search results.

Such a condition would go to the heart of broader antitrust concerns surrounding Google as it enters new markets. The company's Internet search results already highlight some of its own services, including mapping, video and finance. The European Commission and the Texas attorney general are currently looking into whether Google manipulates search results to extend its monopoly into other online businesses.

Companies that rely on ITA also fear that Google could deny them access to the software, particularly as it introduces upgrades. Google so far has only promised to honor all of ITA's current contracts, which expire over the next few years. They also worry that Google could use its control over ITA to get access to their proprietary technology.

Justice Department officials are therefore considering conditions that would require Google to license ITA software to rivals and prohibit it from gaining access to other companies' technology, the person said.

News that an agreement was close was reported earlier by The Washington Post.

In an unrelated case, Google last week agreed to adopt a comprehensive privacy program to settle federal charges that it deceived users and violated its own privacy policy when it launched a social networking service called Buzz last year. The settlement mandates independent audits to oversee and verify Google's privacy program every other year for the next 20 years.

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