April 08, 2011, 1:09 PM — That was fast.
Just hours after reports that Google and federal regulators were close to an agreement regarding the search giant's acquisition of online flight-data specialist ITA Software, the U.S. Justice Department said it has approved the $700 million deal, but with stringent conditions.
From a DoJ press release announcing its approval of the purchase:
[I]n order for Google Inc. to proceed with its proposed acquisition of ITA Software Inc., the department will require Google to develop and license travel software, to establish internal firewall procedures and to continue software research and development. The department said that the proposed settlement will protect competition for airfare comparison and booking websites and ensure those websites using ITA’s software will be able to power their websites to compete against any airfare website Google may introduce. The department said that the acquisition, as originally proposed, would have substantially lessened competition among providers of comparative flight search websites in the United States, resulting in reduced choice and less innovation for consumers.
The department said that Google will also be required to provide mandatory arbitration under certain circumstances and provide for a formal reporting mechanism for complainants if Google acts in an unfair manner.
However, just in case, the DoJ's Antitrust Division also filed a civil lawsuit Friday to block the acquisition should the proposed settlement be rejected by a federal court.
The tentative agreement comes within hours of an expected government shutdown that could have further delayed negotiations. Antitrust regulators have been looking at the ITA deal, first announced by Google last July, for more than eight months.
More from the DoJ announcement:
Under the proposed settlement, Google will be required to continue to license ITA’s QPX software to airfare websites on commercially reasonable terms. QPX conducts searches for air travel fares, schedules and availability. Google will also be required to continue to fund research and development of that product at least at similar levels to what ITA has invested in recent years. Google will also be required to further develop and offer ITA’s next generation InstaSearch product to travel websites, which will provide near instantaneous results to certain types of flexible airfare search queries. InstaSearch is currently not commercially available, but is in development by ITA.
To prevent abuse of commercially sensitive information, Google will be required to implement firewall restrictions within the company that prevent unauthorized use of competitively sensitive information and data gathered from ITA’s customers. The proposed settlement delineates when and for what purpose that data may be used by Google. Google is also prohibited from entering into agreements with airlines that would inappropriately restrict the airlines’ right to share seat and booking class information with Google’s competitors. Finally, the proposed settlement provides for a formal reporting mechanism for complainants if Google acts in an unfair manner.
The proposed settlement has a five-year time limit, so I'm not sure what would happen after 2016. The online travel landscape could be dramatically different by then.
In the short-term, the court's approval must wait until a 60-day comment period expires.
So far there's been no comment from FairSearch.org, the coalition of online travel sites opposed to Google's ITA purchase. If one is forthcoming, I'll add it to this post.