U.S. Clears Google Acquisition of Travel Software

The Justice Department on Friday approved Google’s $700 million acquisition of a flight search software maker, but imposed conditions limiting how Google could use the company’s technology, potentially opening the door to broader antitrust scrutiny of the search giant’s activities.

After an intensive, eight-month investigation, regulators decided that Google could complete the acquisition of ITA Software, which will let Google build flight search tools. But they required 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. The regulators also said Google must develop a formal process for complaints that it is acting unfairly, and submit to government monitoring that it meets these conditions, which are to last five years.

Some legal experts said this could allow regulators to collect information that could be used in a broader antitrust case. In some ways, the case is reminiscent to the early days of the government’s antitrust investigation of Microsoft, when it also submitted to continued government monitoring. That eventually led to a sweeping antitrust case, and, many analysts say, to the decline of Microsoft’s power in the technology industry.

“This is the beginning, not the end, of serious antitrust scrutiny of Google,” said Samuel R. Miller, a partner at the law firm of Sidley Austin in San Francisco, who was special trial counsel to the Justice Department in its first suit against Microsoft.

It is the first time the company has agreed to a consent decree with government oversight related to an acquisition, and a concession that it will live under continued scrutiny.

Google, regulators and opponents of the deal all applauded the decision.

“We’re confident that by combining ITA’s expertise with Google’s technology we’ll be able to develop exciting new flight search tools,” Jeff Huber, Google’s senior vice president for commerce and local, wrote in a company blog post.

Joseph F. Wayland, deputy assistant attorney general of the Justice Department’s antitrust division, said in a statement that the resolution of the case “assures that airfare comparison and booking Web sites will be able to compete effectively, providing benefits to consumers.”

And FairSearch, a group formed by companies opposing the deal — including Microsoft, Kayak and Expedia — called the resolution “a clear win” in a statement. “By putting in place strong, ongoing oversight and enforcement tools, the department has ensured that consumers will continue to benefit from vibrant competition and innovation in travel search,” it said.

Still, the deal did not address one of the opposition group’s biggest worries — whether Google could favor its own results over those of other sites when people search for flights. A Justice official said the department heard complaints about Google biasing search results but determined the issue was outside the scope of the decision.

Prof. Herbert Hovenkamp, an antitrust expert who teaches at the University of Iowa College of Law, said all sides came out well. “It’s a victory for both sides because the parties get to go ahead with the merger and the Justice Department gets to go to the public and say, ‘We’ve protected you from the anti-competitive possibilities.’ ” But Professor Hovenkamp cautioned against looking at the settlement as more than a one-off case.

“I certainly wouldn’t read this to say this is some signal that Google’s going to be coming up against much more aggressive behavior from the government agencies in the future,” he said.

Yet the settlement is a significant turning point for Google.

“Google is heralding it as some win, when in fact the scrutiny is just beginning,” said Patrick C. Lynch, the former Rhode Island attorney general, on a call with reporters arranged by FairSearch. “It’s not going to be just the Department of Justice. It’s going to come from all sides.”

The ITA acquisition is Google’s latest antitrust battle as it faces growing scrutiny from regulators worldwide. Last month, it agreed to 20 years of privacy audits by the Federal Trade Commission in a settlement over deceptive privacy practices in its introduction of Buzz, the social networking tool. Also last month, a federal judge in New York rejected a settlement that would have allowed it to create a digital library, saying it would give too much control to Google’s search engine.

Google is also still fighting other antitrust battles. The Texas attorney general is investigating whether Google has skewed search results in favor of advertisers or its own products, and the European Union is investigating Google’s domination in search. Microsoft filed an antitrust complaint against Google in the European Union last month.

Google’s biggest antitrust loss was in 2008, when the Justice Department prepared to file a lawsuit to block a search advertising partnership involving Google and Yahoo, prompting Google to walk away from the deal.

But Google has had its share of victories in antitrust matters as well. Last year, the Federal Trade Commission approved Google’s $750 million acquisition of AdMob, the mobile advertising company, after Apple eased antitrust concerns by buying a similar start-up. In 2007, the F.T.C. approved Google’s $3.1 billion acquisition of DoubleClick, the display advertising firm, after Google executives were called to defend the deal in Congress.

Google announced its intention in July to buy ITA. Many airlines and online travel agents license the software, including Orbitz, American Airlines, United Airlines and Microsoft’s Bing Travel.

Google has said it would not sell airline tickets itself, but would develop a flight search engine, similar to Bing Travel, that sends shoppers to the airlines’ sites or to online travel agencies.

Google also wants to develop a more advanced kind of flight search. For instance, a traveler could tell Google to find someplace to go that was snowy and fewer than five hours away for less than $300 round trip, and Google would present different itineraries. The approval of the ITA acquisition will now undergo judicial review and is expected to be upheld.

“It is an intrusive settlement, especially to the degree it requires Google to help out its rivals,” said Keith N. Hylton, an antitrust expert at the Boston University School of Law. “But Google can’t be surprised by the Justice Department’s stance in this case. Google knows that this kind of scrutiny is its future.”

Miguel Helft and Steve Lohr contributed reporting.

Source : http://www.nytimes.com/2011/04/09/technology/09google.html?partner=rss&emc=rss