In an interesting game of cat and mouse, the United States Department of Justice has approved Silicon Valley's most successful tech company's intent to acquire ITA, a travel information search service based in Cambridge, MA.
The DoJ filed a consent decree with the conditions that Google continue to license ITA"s tech to existing clients such as Kayak and maintain the fairness of its current availability. Also in the decree consent were stipulations that Google erect firewalls to ensure that ITA data is blocked from other areas of Google.
Interestingly enough, the DoJ has evidently filed a civil antitrust lawsuit to block the impending acquisition of ITA if Google did not consent to the conditions. Google really didn't have a choice, especially with the rampant antitrust allegations running around, as recently reported by Bloomberg.
Google was very happy to accept the terms and conditions, and posted the following on their blog today:
It's important to us that ITA continue with business as usual, providing great service to its business partners. We indicated last July that we would honor ITA's existing contracts. Today we've formally committed to let ITA's customers extend their contracts into 2016. We've also agreed to let both current and new customers license ITA's QPX software on "fair, reasonable and non-discriminatory terms" into 2016-along with related commitments aimed at making ITA's technology available to other travel sites.
The above quotation came directly from the DoJ's press release, which we have embedded below.
Also interesting that Microsoft complained to the DoJ and Federal Trade Commission that Google's purchase would be an unfair advantage. Does anyone else think the world of Tech Corps is as hypocritical and neurotic as that of Mean Girls?
Friday, April 8, 2011
Justice Department Requires Google Inc. to Develop and License Travel Software in Order to Proceed with Its Acquisition of ITA Software Inc.
Mandatory Licensing, Research and Development Commitments and Firewall Requirements Will Preserve Competition in Online Airfare Search in the United States
WASHINGTON - The Department of Justice announced today that in 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.
The Department of Justice's Antitrust Division filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., to block the proposed acquisition. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns of the lawsuit.
"The Department of Justice's proposed remedy promotes robust competition for airfare websites by ensuring those websites will continue to have access to ITA's pricing and shopping software," said Joseph Wayland, Deputy Assistant Attorney General of the Department of Justice's Antitrust Division. "The proposed settlement assures that airfare comparison and booking websites will be able to compete effectively, providing benefits to consumers."
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.
Google Inc. is the largest search engine in the United States. Google is a Delaware corporation with its principal place of business in Mountain View, Calif., and with 2009 revenues of more than $23 billion.
ITA Software Inc. is a leading producer of airfare pricing and shopping systems in the United States. ITA is headquartered in Cambridge, Mass.
As required by the Tunney Act, the proposed five-year settlement, along with the department's competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to James J. Tierney, Chief, Networks and Technology Enforcement Section, 450 Fifth Street, N.W., Suite 7100, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed settlement upon finding that it is in the public interest.
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