Google's getting into the travel business: it announced plans Thursday to acquire ITA Software, a company that provides travel information to various Web sites, for $700 million.
The deal had been rumored in recent days but was met with skepticism by some who believed it would prompt a swift inquiry from government regulators leery of Google's control of such information, which is widely used by travel sites and other search engines, such as Microsoft's Bing. Google said it plans to use ITA's software in Web search to help users find flight information.
ITA, based in Cambridge, Mass., is the brainchild of MIT graduates who figured out a way to use algorithms and technology to change the way people booked flights online and searched for cheaper fares. It has relationships with major airlines all over the world, and it also provides services to travel agencies and search engines, as described above.
Jeremy Wertheimer, president, CEO, and co-founder of ITA, said his 500-person company basically takes information distributed by airlines regarding flight schedules, prices, and seat availability, and publishes that to its partners. Those partners include major travel search sites such as Hotwire, Kayak, Orbitz, and start-up Rearden Commerce, all of which will face a more difficult competitive position, if this deal goes through: it's not clear whether Google will continue to provide ITA's services to those partners.
Google said it plans to use ITA's technology in its Web search tools and to allow potential passengers to shop for tickets right from Google. Travel search makes up a huge portion of Google searches, but it's a complicated type of search to express in a query box, Marissa Mayer, Google's vice president of search products and user experience, said on a conference call following the announcement of the deal.
"Google has already come up with new ways to organize hard-to-find information like images, newspaper archives, scholarly papers, books, and geographic data. Once we've completed our acquisition of ITA, we'll work on creating new flight search tools that will make it easier for you to search for flights, compare flight options and prices, and get you quickly to a site where you can buy your ticket," Mayer said in a blog post accompanying the announcement.
As it did subsequent to acquiring AdMob, Google prepared a Web site highlighting the benefits of the deal for users and downplaying any anticompetitive effects. Google CEO Eric Schmidt said he expects "a significant review" from federal regulators, who tend to take a closer look at just about anything Google does these days, and who are unlikely to miss this chance to exert some pressure on Google, following the Federal Trade Commission's decision to let the $750 million AdMob deal go through.