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Google to buy travel software firm ITA

But regulators will probably scrutinize the plan to fold the dominant flight-information company into the world's largest search engine.

July 02, 2010|By Jessica Guynn, Los Angeles Times

Reporting from San Francisco — Google Inc. is getting into the travel business.

The Internet search giant said Thursday that it was buying ITA Software, a flight-information software company, for $700 million in cash.

But the deal could face some major turbulence.

Regulators are likely to take a hard look at Google's plans to fold the software company widely used by the travel industry into its search engine.

Rumors of the acquisition have been circulating for several months and unnerved other travel industry players, who worry that it would hand Google too much influence. Several, including, had competed to buy Boston-based ITA but were outbid.

ITA is used by airlines, travel agents and websites such as Hotwire and Microsoft Corp.'s Bing. It offers flight times, availabilities and prices.

On a conference call Thursday, Google executives described the deal as "pro-consumer," saying it would benefit passengers by making it easier for them to comparison shop for flights.

But they said they expected U.S. regulators to scrutinize the pairing of the world's largest search engine with the dominant travel software company.

"Airline tickets online is a very large business, and of course a global business," Google Chief Executive Eric Schmidt said, "but I don't know about you all, but when I do it, I find it sort of frustrating."

He said prices and availabilities change constantly and there are too many options even for a simple itinerary.

"So when we looked at it, we said, we still had more room for competition here and innovation," he said.

ITA was founded in 1996 by a team of MIT scientists. 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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