April 8, 2011 12:18 am

Google considers bowing to oversight

Google is close to bowing to government oversight for the first time in order to win approval for a big merger, a move that would allow it to complete its controversial $700m purchase of US travel technology company ITA Software.

The development comes just as arch-rival Microsoft is on the brink of escaping the close scrutiny of US regulators for the first time in nearly a decade, a watershed moment in its own dealings with the competition authorities.

Google has been discussing terms for weeks under which regulators would let the ITA acquisition go ahead, and an agreement could be delayed further or the internet company could decide to abandon the deal altogether rather than make concessions, two people familiar with the talks cautioned.

Under the terms being discussed, the company would agree to license some of its travel technology to internet companies, airlines and others for a set period of time, according to these people. ITA’s technology is used by many leading airlines and online travel sites to handle flight bookings, and Google’s plan to buy the company has stirred concerns about whether it would continue to license it on the same terms.

A consent decree with the US Department of Justice, laying down requirements for future licensing, would bring continuing official oversight, although limited to a narrow part of Google’s business.

Agreements that impose ongoing monitoring by regulators are relatively rare, although a similar arrangement was put in place recently when Comcast bought NBC.

Microsoft reached its own consent decree with the Department of Justice in 2002 after a legal battle that at one stage led a US judge to order a break-up of the company. The agreement, which included requirements for Microsoft to license out some of its own technology to rivals, is due to expire on May 12.

Google’s rivals have been agitating in Washington for months for a more extensive antitrust investigation of the company, echoing a similar review already under way in Europe, and the expected end to the ITA negotiations has aroused renewed speculation about whether regulators will use the moment to hint at wider interest in the search company.

However, in spite of an expression of interest from a commissioner at the Federal Trade Commission, which has handled other Google cases, and a fuller inquiry launched by the state of Texas, it is unclear whether either the DoJ or the FTC are preparing to follow Brussels in digging deeper.

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