You know when Google wants to penetrate a market, they do what it takes to get in… in a big way. They’re promising consumers better deals and more convenience. Google needs approval from the U.S. Justice Department for the $700-million deal to buy ITA, the web’s top airline-airfare tracker and software that’s powered the reservation systems of most major U.S. airlines and a fleet of online fare-comparison services for the past decade.
Kayak, Expedia, Travelocity and other online travel sites fear this approval by U.S. Justice Department as they believe they won’t stand a chance of competing.
Forrester Research estimates the online travel bookings at $80 billion annually. Itès no wonder Google wants in on the action. The fate of this market rests on the U.S. Justice Department and anti-trust regulators.
Thomas Barnett, a former leader of the Justice Department’s antitrust division claims “Google will have leverage over the entire online flight industry.” Barnett is now representing Expedia Inc., which has joined the fight with Microsoft Corp.’s Bing, Travelocity, Kayak Software Corp. and Farelogix Inc. against the ITA deal.
Google has made it clear that their interest lies in referring consumers to non-Google-owned sites rather than do it themselves. Competitors are suspicious about who gets the traffic. There is also the concern that Google’s recommendations would have more presence, favoring its own services.
Google’s real interests seem to lie more in the advertising revenue than referral commissions. It is estimated that travel advertising brings in approximately $3 billion, representing nearly 10% of Google’s annual revenue. If you were sitting in as Google’s CEO, the move into the online travel market would seem like a pretty smart thing to do. As for the Kayak, Travelocity, expedia and other players, they have a real reason to fear the ITA deal.