Google to Bob: Trust Us…

November 8th, 2010 | Bookmark and Share | SUBSCRIBE

We’re flattered that Google is taking a page out of the FairSearch.org “Playbook” and promoting a new web video this morning. But we’re still waiting for Google to provide a straight answer as to why regulators should allow it to acquire ITA Software – the leading provider of flight search in the US – when there is so much potential for consumer harm.

Google fails to explain why it is spending $700 million to acquire control of the key technology its rivals in online travel search use to provide a competitive product when it could do all of the same things by simply licensing the software like all of ITA’s existing customers.

“Google won’t be setting airfare prices,” the company says. But acquiring ITA will enable Google to keep ITA’s best technology for itself, and steer consumers to its own travel product or that of its preferred partners instead of competitors. As Google points out, it doesn’t make money from consumers – it makes money from advertisers. And this deal will give Google the power to raise ad rates for the entire online travel sector. Analysts at JP Morgan and Goldman Sachs estimate that 10 percent of Google’s total revenue already comes from online travel. Is Google really claiming that travelers don’t pay more when advertising costs (or gas prices) rise?

Google also says it “has no plans to sell airline tickets to consumers.” But many of  ITA and Google’s competitors in online travel search don’t sell tickets – they help consumers and business travelers find the best flight for them at the best price. Allowing Google to acquire a critical input to airfare search technology will enable Google over time to consolidate online search for flights, ultimately leading to less transparency and choice for consumers and higher advertising prices, and eventually raising fares for consumers and business travelers.

Google may be big and powerful, but it can’t run away from the facts. Especially when competition and consumer choice in online travel is at stake.