Google acquires ITA (airline management software)
Companies in Relationship
, ITA Software
Initial Announcement Date:
Consideration: $676M in cash (Source: Google 10-Q)
Google signs a definitive agreement to acquire ITA Software. ITA offers Internet-based software to the airline industry. The company's products include: 1) QPX, airfare pricing management system for airlines and travel distributors; 2) RES, a passenger reservation management and departure control system. Sellers include Battery Ventures, General Catalyst Partners, PAR Capital Management, Inc., Sequoia Capital and Spectrum Equity Investors. Jeremy Wertheimer, ITA CEO, will lead Google’s ITA unit.
Google plans to develop search tools to help users find travel information more easily on the Web, including making it easier for travelers to compare shop for flights and airfares. Google doesn’t currently compete against ITA Software and therefore the deal is not expected to change existing market shares. ITA licenses its software to travel booking sites as well as to sites operated by individual airlines. Google added it would "honor all existing agreements, and we're also enthusiastic about adding new partners."
With ITA in its stable, Google is better positioned to compete with Bing (Microsoft's search engine). In fact, Bing uses ITA's technology to provide airfare information to its users. Currently, Google directs users searching for air travel data elsewhere.
April 2011 -- Google received antitrust clearance on its acquisition of ITA. However a number of conditions were imposed by the Department of Justice, limiting how Google could use the company’s technology. These conditions, which are to last until 2016, would require Google to continue to license the software to other companies, to develop ITA products and offer them to competitors, and to erect a firewall so it cannot see sensitive information from competitors. Google is also required to develop a formal process for complaints where it is alleged that the company is acting unfairly, and make it accessible to government monitoring.
According to the NYT, this is the first time Google “has agreed to a consent decree with government oversight related to an acquisition, and a concession that it will live under continued scrutiny.”
September 2011 -- Google launches Flight Search, the first product resulting from its purchase of ITA. Just how far Google will go in travel services will be intriguing to watch. The company continues to improve its hotel listing service by including virtual tours as well as pricing. Since according to some analysts, some 5% of Google's advertising revenue comes from online travel agents such as Expedia and Priceline, it may be reluctant to compete too aggressively in this space. (In 2014, online travel agents were spending some $4 billion in digital advertising.) Google perhaps is pondering a lesson from the AOL/Time Warner merger, in which AOL struggled (often successfully) to harmonize the conflicts that emerged with its advertising partners after it owned competing media and other content as a result of the Time Warner deal.
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