After a nine month review, the Justice Department today approved Google Inc.'s $700 million purchase of flight data provider ITA Software Inc., but imposed significant conditions including a requirement that the company develop and license travel software so that competitors will be able to power their Web sites.
However, the concessions do not specifically address widespread competitor complaints that Google abuses its general dominance in Internet searches. Nor did DOJ allege broad antitrust violations under Section 2 of the Sherman Act, though the agency left the door open for future action.
It’s the first time Google, which handles about 66% of Internet searches in the United States, has accepted conditions on a merger to win antitrust approval (the company abandoned a 2008 deal with Yahoo in the face of government opposition).
According to DOJ, the ITA merger 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.” The government simultaneously filed suit in U.S. District Court for the District of Columbia to block the merger and proposed a settlement, subject to approval by the court.
Online travel is one of the few search areas where Google is not dominant. The proposed deal triggered fierce opposition from FairSearch, a coalition of online travel sites including Expedia, Kayak and Travelocity, which feared that if Google acquired ITA, it would soon control the online travel market.
But the group said it was satisfied with the terms of the settlement, calling it “a clear win for consumers.”
FairSearch member Expedia’s counsel Thomas Barnett, a partner at Covington & Burling and former head of DOJ’s Antitrust Division, praised the government’s action. “When the deal was first announced, many took a very quick look and said, ‘This is a vertical acquisition, it will sail through,’” he said during a press conference call. “I give the department credit for not taking such a cursory view of it.”
The key product at issue was software by ITA called “QPX,” which is used by many airlines, online travel agents and online travel search sites to provide complex, customized flight searches.
The settlement requires Google to continue to license QPX to current and new customers on “fair, reasonable and non-discriminatory terms” into 2016. Google will also be required to continue to fund research and development of the product at least at similar levels to what ITA has invested in recent years and to further develop and offer ITA’s next generation InstaSearch product to travel Web sites.
In addition, Google must implement firewall restrictions within the company that prevent unauthorized use of competitively sensitive information and data gathered from ITA’s customers.
Finally, the proposed settlement provides for a formal reporting mechanism for complainants if Google acts in an unfair manner.
“The Department of Justice’s proposed remedy promotes robust competition for airfare websites by ensuring those websites will continue to have access to ITA’s pricing and shopping software,” said Joseph Wayland, deputy assistant attorney general, in a news release.
Google stresses that the deal will be boon to consumers, eventually allowing them to pose queries like “flights to somewhere sunny for under $500 in May,” and get flight times, fares and a link to sites to purchase tickets in response.
“It’s important to us that ITA continue with business as usual, providing great service to its business partners,” wrote Google senior vice president Jeff Huber 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.”
Still, wider antitrust concerns remain about Google’s market dominance.
Sen.Herb Kohl (D–Wis.) said in a formal statement, “We continue to scrutinize broader questions about the fairness of Google’s search engine, and whether it preferences its own products and services to the detriment of competitors.” Kohl has pledged to hold antitrust subcommittee hearings on Google.
Jonathan Zuck, president of the Association for Competitive Technology, called the settlement “a good start on what must be a longer investigatory process….The Justice Department has yet to address Google's admitted manipulation of search results, but we are cautiously optimistic that antitrust regulators will continue to look into Google's anticompetitive practices."
Former Federal Trade Commission commissioner Pamela Jones Harbour, who is now a partner at Fulbright & Jaworski and represents Google rival Microsoft Corp., said, “Today’s enforcement action against Google validates the concerns expressed by many about Google’s business practices. The department’s decree provides a mechanism to address concerns about the manipulation of flight search results. This echoes the core concerns being investigated by the European Commission and the Texas Attorney General’s office.”
Last week, Google settled Federal Trade Commission charges that it used deceptive tactics and violated its own privacy promises to consumers, and agreed to implement an unprecedented privacy program.
Google was represented in the merger deal by John Harkrider and Russell Steinthal of Axinn, Veltrop & Harkrider and by Susan Creighton and Franklin Rubinstein of Wilson Sonsini Goodrich & Rosati.
ITA turned to Michele Sasse Harrington, Lynda Marshall, Logan Breed and Charlesa Ceres of Hogan Lovells.
At the DOJ, the settlement was signed by Aaron Hoag, an attorney in the Antitrust Division’s Networks and Technology Enforcement Section.
But Google would be required to license ITA's software to websites on "commercially reasonable terms" and implement firewalls to prevent inappropriate use of personal infromation gathered from customers, with the proposed settlement detailing "when and for what purpose that data may be used by Google," the Justice Department said.
Posted by: Atlanta Roofing | April 11, 2011 at 05:12 AM