April 08, 2011, 11:54 AM — Just when it looked like U.S. antitrust regulators were close to suing Google over its acquisition of flight-data company ITA Software, now there are rumors the feds are set to approve the purchase -- with conditions.
The Wall Street Journal's favorite source -- otherwise known as "people familiar with the matter" -- says the two sides are close to an agreement, though there's a chance the whole thing could fall through:
The proposed agreement would for the first time allow government antitrust monitoring of a part of Google's operations to assure that the company doesn't unfairly use its control of ITA's airline data to put rivals at a disadvantage, people familiar with the discussions said.
While the WSJ's anonymous sources say an agreement could be reached any day, that timetable may be disrupted should the government shut down over budget negotiations.
Google announced its $700 million acquisition of ITA last July, prompting almost immediate opposition from online travel sites which claimed the deal would give the search giant an unfair competitive advantage in their market.
U.S. antitrust regulators have been scrutinizing the ITA purchase since last summer. If an agreement isn't reached, Google faces two options: Fight the feds in court or walk away from the deal. You can forget about the latter, though, because it would set a bad precedent for future Google acquisitions.
Beyond the ITA matter, however, is the larger question of Google's search industry dominance. As Reuters reported earlier this week, "U.S. antitrust regulators may investigate Google's dominance of the Web search industry, and will settle on the agency to launch a probe once scrutiny into the company's plan to buy ITA software is done."
It's hard to tell if such an investigation is contingent on the outcome of ITA. If the ITA agreement falls through, I don't see how Google could avoid a larger probe. Should the ITA purchase be approved with conditions, it's likely that Google would escape an immediate investigation because the Obama Administration is skittish about appearing "anti-business."
But I'm just guessing, like everyone else, including "people familiar with the matter."
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