Exclusive: U.S. asks about search fairness in Google/ITA
WASHINGTON (Reuters) - The U.S. Justice Department's review of Google Inc's planned acquisition of airline ticketing software company ITA Software is focusing on making sure ITA's products remain available, even to Google's rivals, according to a source close to the deal.
Google's proposed acquisition of ITA has sparked worries in the tech world that travel websites such as Orbitz Worldwide Inc, Kayak and TripAdvisor could be deprived of ITA's software.
Kayak, for example, is asking for assurances that Google will extend its software licenses when they expire, that the software is upgraded and that a firewall is placed around the companies' proprietary software, which operates in conjunction with the ITA software and may be in ITA servers, to protect their intellectual property.
But Google has been unwilling to give them those assurances, said Kayak spokesman Robert Birge. "We have found the conversations with Google to be frankly wanting," he told Reuters.
Google, the world's No. 1 Internet search engine, announced plans to acquire ITA Software for $700 million in cash in July.
Tom Barnett, former chief of the Justice Department's antitrust division who now represents Expedia, said it would be difficult to craft a settlement to take the licensing assurances and intellectual property protection into account.
"I'm not saying it's impossible. I'm saying it's difficult," said Barnett, a critic of the deal.
But Robert Doyle, an antitrust expert at the law firm Doyle, Barlow and Mazard PLLC, said a focus on licensing would mean that the deal would go through.
"That's a key issue," he said. "That would indicate that settlement has been proposed in some format and they're testing it."
Google has argued that since it does not compete against ITA Software, the deal would not affect competition in the online travel industry and, thus, is legal.
"We're excited to inject more choice for consumers into the online travel space, and while we continue to cooperate with the Justice Department's review, we are ultimately confident that this acquisition will increase competition," said Google spokesman Adam Kovacevich.
A Justice Department spokeswoman declined comment on the investigation.
LOOKING AT MANIPULATED SEARCH RESULTS?
Early in the probe, the Justice Department's antitrust division asked questions about allegations that Google favored certain websites in searches, sources close to the deal said.
Foundem, a British price comparison website, is one of several companies that have accused Google of manipulation results so that Foundem and other rival websites show up lower in search results. Users overwhelmingly tend to click on higher results.
The Justice Department asked companies about search fairness issues before and after Google announced in August that it was going to a "second request," which essentially means that the antitrust probe of the deal would be more in depth.
Most of the questions came after the second request into the $700 million deal was announced, said one source who has been in contact with the Justice Department about the deal and asked not to be named so as not to jeopardize his relationship with that department.
"It's a theory of harm that the DOJ is looking at," said a second source, who also asked not to be named so as to not jeopardize his relationship with the Justice Department. "They treat their stuff differently than they treat other people."
European regulators are also looking into Google's search practices.
The ITA buy is part of Google's acquisitions and recruiting spree as it aims to ensure its online products remain popular as surfers turn to new services like the wildly popular Facebook and wireless gadgets.