Fact-Checking Google: Instead of Buying ITA, Google could Just License its Software and Collaborate with ITA
Google says: “We think we can make more significant innovations and bigger breakthroughs in online flight search for consumers by combining our engineering expertise with ITA’s than we would by just licensing ITA’s data service.”
Let’s take a closer look at Google’s version of fact vs. fiction. Google claims its only interest in acquiring ITA Software for $700 million is to facilitate online flight search. But if that were the case, Google could simply license ITA’s software and collaborate with ITA like the other travel search sites. It would certainly be a lot cheaper than buying ITA outright.
Under a license agreement, Google could still “combine its engineering expertise with ITA’s” to “make significant innovations and bigger breakthroughs in online flight search for consumers.” That’s what other current customers of ITA do – collaborate closely with ITA engineers to customize how they use the company’s back-end technology to power online flight search.
What then does Google gain by purchasing ITA rather than licensing and collaborating? The answer is obvious: Google gains control over who gets access to ITA’s technology.
Google will gain the power to withhold the latest and greatest ITA technology from its competitors.
Already, Google is giving us a hint of what’s to come – to date, both Google and ITA have refused to provide assurances to sites like KAYAK that they will be able to access ITA software upgrades or renew existing licenses. By keeping ITA’s best technology for itself and away from rivals with competing online travel services, Google will be able to siphon consumers away from other sites to its own travel service or to Google’s preferred partners that have paid the highest advertising fees.
Ultimately, the more consumers on Google’s own travel sites or those of its preferred partners, the more advertising revenue Google earns and the more power Google has to raise advertising rates. And because higher rates lead to higher travel prices, business travelers and other consumers will ultimately end up paying the price for Google’s increased control of online travel search.
Furthermore, Google won’t commit to protecting the intellectual property that ITA’s licensees have developed in customizing their use of the ITA software.
It works like this: KAYAK and other ITA licensees have developed complex algorithms of their own to enhance the services they each provide to their customers. Those algorithms are proprietary and closely guarded secrets of the licensees, but ITA gains access to them as part of providing its services. An acquisition of ITA would suddenly give Google access to all of this proprietary search technology created by other travel sites that rely on ITA’s software. And Google won’t promise not to misuse this information.
Of course, Google may claim that it has good intentions and will do no evil. But Google can’t deny the facts. The facts are that Google’s acquisition of ITA will give it the incentive and ability to harm consumers by impairing competition for travel search.