The US Department of Justice (DOJ) essentially cleared Google's purchase of flight-data provider ITA on Friday, preventing an expected antitrust showdown between the online giant and the US government. But the new deal, in the form of a settlement, comes with a number of caveats, leading both sides—Google and the many companies that opposed the deal—to claim victory.
Google announced its $700 million deal to purchase ITA, which provides flight data to numerous travel services, in July 2010. The proposed acquisition was immediately slammed by most prominent travel companies, and by Microsoft, which joined an industry group called FairSearch to prevent the deal in December 2010. (Like many companies, Microsoft is an ITA customer in that its Bing service utilizes ITA data on the back end to provide travel-related search results to consumers.)
Late last week, however, the DOJ rejected Google's original proposal and provided a new settlement in which several changes were made to improve competitiveness. In this settlement, the agency mandates that Google must continue acting fairly with those companies that utilize ITA services, including those it sees as competitors.
"The acquisition, as originally proposed, would have substantially lessened competition among providers of comparative flight search websites in the United States, resulting in reduced choice and less innovation for consumers," a DOJ statement reads. "[But] the proposed settlement will protect competition for airfare comparison and booking websites and ensure those websites using ITA's software will be able to power their websites to compete against any airfare website Google may introduce."
Additionally, the DOJ requires Google to provide mandatory arbitration under certain circumstances and provide a formal reporting mechanism for complainants if the company is found to act in an unfair manner. Google will also be required to continue licensing ITA's software to travel services at "commercially reasonable terms." This includes ITA's next-generation software, called InstaSearch, which is currently in development.
Google immediately agreed to the terms of the settlement. "We're excited that the US Department of Justice approved our acquisition," Google Senior Vice President Jeff Huber wrote in a blog post. "We indicated last July that we would honor ITA's existing contracts. Today we've formally committed to let ITA's customers extend their contracts into 2016. We've also agreed to let both current and new customers license ITA's QPX software on 'fair, reasonable, and non-discriminatory terms' into 2016, along with related commitments aimed at making ITA's technology available to other travel sites."
Google and ITA both claim to be committed to closing the deal as quickly as possible and getting new travel tools to market soon as well. "We will begin work immediately to close the acquisition, and are committed to making the integration process as seamless as possible for our employees and customers," a statement from ITA reads. "We are excited about joining forces with Google, and look forward to getting our teams together after close to start working on innovative new ways to make travel search easier."
As for the opposition, Microsoft and other companies that allied to oppose the deal believe that the DOJ concessions make a big difference, and on that note, they're claiming victory as well. "By putting in place strong, ongoing oversight and enforcement tools, the [DOJ] has ensured that consumers will continue to benefit from vibrant competition and innovation in travel search," a statement from FairSearch reads. "Today's decision by the Justice Department to challenge Google's acquisition of ITA Software is a clear win for consumers."