Thursday, July 1, 2010

Google to acquire travel software firm ITA

ITA Software search string made to the top of Google Search Trend. And it is understandable, because the name of the company ITA Software has became linked to the leading search provider Google itself. And, Google, as usual, is in the community focus, being at the focus of public attention.

According to the official Google press release, today, July 1, 2010, Google announced an agreement to acquire ITA Software, a Cambridge, Massachusetts flight information software company, for $700 million, subject to adjustments.
  • Google's acquisition of ITA Software will create a new, easier way for users to find better flight information online, which should encourage more users to make their flight purchases online.
  • The acquisition will benefit passengers, airlines and online travel agencies by making it easier for users to comparison shop for flights and airfares and by driving more potential customers to airlines' and online travel agencies' websites. Google won't be setting airfare prices and has no plans to sell airline tickets to consumers.
  • Because Google doesn't currently compete against ITA Software, the deal will not change existing market shares. We are very excited about ITA Software's QPX business, and we're looking forward to working with current and future customers. Google will honor all existing agreements, and we're also enthusiastic about adding new partners.
ITA’s technology earlier drew interest from several other firms, including Expedia Inc.,, Travelport LP and Amadeus SA, people familiar with the matter said. Some of them submitted unsolicited bids for ITA but weren't given access to ITA's financial information because it was in exclusive talks with Google. There are rumors that at least one bidder was taking a "wait and see" approach to how Google would handle ITA's clients while another was considering whether it should take a more vocal stand against the deal.

Google said it would "honor all existing agreements, and we're also enthusiastic about adding new partners."

Henry Harteveldt, a travel-industry analyst at market watcher Forrester Research Inc., said he "would be surprised if the regulators found any cause for concern."

The deal helps Google compete with rival Microsoft Corp.'s Bing search engine, which uses ITA's technology to provide airfare information; search queries on Google currently point air travelers to other sites.

The acquisition is Google's fourth-largest in its nearly 12 years of existence and comes on the heels of a $750 million purchase of AdMob Inc., a mobile advertising company. That deal received significant scrutiny by federal antitrust regulators before being approved earlier this year.

With ITA, Google could provide more detailed results, including recommending specific flights, and better compete with the other online travel agencies. Critics worry, that Google could use its dominance in overall search to direct traffic to its own offering or increase licensing fees for ITA software. On Thursday Mr. Schmidt said "Google is not going to become a travel agency."

ITA was founded in 1996 by a team of computer scientists at the Massachusetts Institute of Technology. It raised a $100-million round of funding in 2006 from venture capital firms Sequoia Capital, Battery Ventures and General Catalyst Partners.

The deal signals Google's serious interest in becoming a major player in travel, a hub of online commerce including search.

"With Google, we think we will have access to the scale, both of technology and of other bright people to work with, to help really take this to the next level," ITA Chief Executive Jeremy Wertheimer said.

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