Last updated: February 18, 2011 8:36 pm

Call for probe into Google’s bid for ITA

US regulators should undertake a broader review of Google’s online dominance as they decide whether to allow its acquisition of travel information and technology company ITA, according to an influential US antitrust body.

The call, in a paper published by the American Antitrust Institute on Friday, comes as the search company is in the late stages of trying to agree terms with the Department of Justice that would allow it to go ahead with the deal, according to people familiar with the matter.

An acquisition of ITA would give Google control of technology for showing and analysing fares that is used by many other online travel services, as well as airlines themselves, and has drawn complaints that it would put the search company in a position to dominate the market for online travel search.

Google accused the AAI of trying to apply “vague new standards, which have no basis in law.” However, it also pointed out that the organisation “acknowledges that government should not regulate search results and that the Google-ITA Software acquisition is well within the legal rules governing mergers.”

The call for a wider review comes as European regulators are undertaking their own broad investigation into Google’s search rankings and advertising practices.

The Texas attorney-general is also looking into whether Google unfairly favours its own services in its search results, though Washington has so far resisted undertaking its own wider investigation.

Based only on a narrow consideration of the online travel industry, the proposed ITA deal did not clearly raise issues under US antitrust laws, though it deserved to be scrutinised closely on a number of points, according to the AAI paper.

However, the institute added that, when viewed from the broader position of Google’s dominance of general search, the purchase raises troubling issues.

Clearance of the acquisition could signal a threat to other specialised internet markets where Google might want to expand, according to the institute. With the search company’s core search engine starting to mature, “a surviving
ecosystem of specialised, vertical search markets seems to be moving squarely into the company’s strategic crosshairs”, it added.

Google and the Department of Justice have been discussing terms that would ease regulatory concerns while heading off an outright block of the deal, according to people familiar with the case.

These include licensing concessions that would guarantee that ITA’s technology was still made available to other online companies – though critics of the deal complain that it is hard to craft a compromise that give others access to future ITA innovations.

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