Google Buys ITA for $700M to Boost Travel Search
Google has reached an agreement to buy ITA Software, a maker of air-travel flight-information software whose customers include major airlines and online travel agencies.
Google will pay US$700 million in cash for the Cambridge, Massachusetts-based software vendor, the companies announced on Thursday.
Google plans to use ITA's software to improve the ways in which people can find flight information online using Google search services, Google said in a statement.
Travel information searches make up a significant portion of Google queries, so the company wants to enhance its technology in this area, which is ripe for innovation, Google and ITA executives said during a press conference.
"Travel is one of the hardest search problems around, both in terms of how users like to express their queries and in terms of the data and accuracy and speed needed to get people the types of results they're looking for," said Marissa Mayer, Google's vice president of Search Products & User Experience.
Jeremy Wertheimer, ITA CEO and president, said the 500-person company has been involved in the online travel information market from its beginnings and looks forward to leveraging Google's resources to further develop and refine its software.
"We're proud of what we've accomplished. Although we've come a long way, we feel there's a lot more that we can do to improve online travel," he said.
More than half of all airline tickets are bought online, making this a very large business, but the user experience leaves a lot to be desired, which affects not only consumers but also airlines and travel agencies, said Google CEO Eric Schmidt. Today, consumers often have to visit multiple sites to find the best deals, which constantly change, he said.
"Airline travel and [online] search are a perfect opportunity for more innovation, more investment," as well as for more competition, Schmidt said.
ITA, founded in 1996, counts among its customers American Airlines, Continental Airlines, Kayak, Orbitz, Southwest Airlines, TripAdvisor, United Airlines, US Airways, Virgin Atlantic Airways and Microsoft's Bing.
Google said it will "honor all existing agreements" ITA has in place and plans to add new partners.
Still, competitors and government regulators might object to Google's purchase of ITA, whose technology is a vital component in the systems of many online travel agencies and airlines, said industry analyst Greg Sterling from Sterling Market Intelligence.
"The concern could be that Google would control an asset that is critical to the operation of a major industry," Sterling said.
The QPX technology from ITA is designed to organize data such as flight times, flight availability and ticket prices. Coming up with a better user experience will be "a big engineering challenge," Schmidt said.
"We'll build new flight search tools that focus on end users, and those tools will let you search for flights, compare flight options and prices and all that type of stuff, and very quickly get you to a site where you can then buy your ticket," he said.
To improve the user experience, Google will need to corral all the air travel information in as comprehensive a manner as possible, Sterling said. A big problem right now is the need for users to visit multiple sites to obtain a holistic view of prices, schedules and other variables, he said.
Giving end users a better search experience will translate into higher Web site traffic and sales for online travel agencies and airlines, Schmidt said, adding that Google is confident that the U.S. government will approve the deal.
The Google and ITA officials didn't provide specifics of what new products or services Google may develop with the ITA technology, so it's not clear how much of a competitive threat the deal will represent for other industry players, including existing customers of ITA.