US DOJ Further Probes Google Flight Data Buyout Bid

The US’ Department of Justice is well prepared when it comes to the flight information software industry and Google’s attempt to buy ITA Software, according to an executive in the industry.

Google said on 27 August the DOJ had issued a second request for information about the search giant’s $700 million (£455m) bid to acquire ITA Software.

The DOJ is concerned about how the bid would affect competition. ITA supplies flight route and pricing information to services such as Microsoft Bing Travel, Orbitz and Kayak.com.

Controlling access

Google would effectively control access to the ITA data. Google has said it planned to honour the contracts between ITA and its customers.

The regulatory body wants to make sure Google won’t take steps to hurt those businesses and the hundreds of others that use ITA QPX software.

Atanas Christov, chief executive of ITA rival and flight pricing comparison service Vayant, said he spoke with the DOJ for several hours on 18 August. Christov, who said a Google acquisition will boost competition in the industry, said he came away impressed by how well versed the agency was with the flight information space.

“Vayant’s overall position toward the acquisition is that we’re really friendly to it,” Christov said. “We think it can really expand the [playground for travel innovation, which is missing because there is a consolidated tree of closely knit global distribution systems that sit in the middle of the space.”

Europe’s Amadeus and Sabre and TravelPort in the US provide those global distribution systems. These companies horde data such as seat availability, which is expensive and difficult to access for business customers such as ITA and Vayant that need it.

ITA, Christov said, presented a challenge to those GDS vendors that have created such high barriers to entry in the space.

Were Google get ITA, Christov believes Google would do to travel data what it did to maps with Google Maps, opening the data API and making the travel data available to others.

Innovation

“Google could make the data available to other companies trying to innovate in the space,” Christov said. “There will be more competition and more new entrants to the space, which is what we haven’t seen in the last five to ten years because it’s hard and expensive to get.”

Christov seemed confident the DOJ will pass the bid, partly because of his input and partly because the DOJ asked him very specific questions about how the flight information software industry worked.

For example, he said the regulator asked him what was the frequency of fare updates Vayant offered users, and whether that frequency should be increased or not. This showed the DOJ had done its homework, he said.

“I was extremely impressed with the DOJ’s level of understanding of the industry,” Christov said. “It’s not an easy sector to dissect.”

This attention to detail stands in stark contrast to the approach the Federal Trade Commission took in asking experts in the mobile display advertising industry whether Google’s acquisition of AdMob would impinge the market.

Several people interviewed by the FTC questioned the regulator’s knowledge and competency to make a sound decision in the space.

An ominous sign

Second requests for info to determine if a potential acquisition is anticompetitive tend to stand out as ominous signs for the acquirer, but Christov didn’t get that impression from his two and a half hour talk with the DOJ.

“Even if a second request sounds like a serious matter in other instances, here it might just be a fact-gathering thing,” Christov said.

Google, which is trying to get a dog in the flight information race to combat Bing and others, hopes this proves true.