Online travel agency leader Expedia Inc. and global distribution system operator Sabre Holdings are among companies that formed a coalition to lobby against Google Inc.'s pending $700 million acquisition of ITA Software, saying the merger would likely stifle competition and innovation and ultimately hurt consumers.
Kayak and Farelogix are also members of the coalition, which on Oct. 26 launched the website FairSearch.org to put pressure on the U.S. Justice Department to challenge the proposed acquisition. Expedia's Trip-Advisor and Hotwire divisions and Sabre's Travelocity unit are also part of the group.
The group said that the dominance of both Google's online-search operations and ITA's air-pricing platform would create a combination that would have the power to limit travel choices, quash innovation and ultimately boost travel prices. Google is responsible for two-thirds of all U.S. online searches, according to the marketing research firm ComScore, while ITA powers two-thirds of all U.S. carrier-direct online flight searches, according to the coalition.
The merger "raises some serious concerns for travelers and the online travel industry as a whole," Expedia CEO Dara Khosrowshahi said in an Oct. 26 statement. "We believe consumers deserve transparency, and that they -- not search engines -- should choose winners and losers in online travel."
Google refuted FairSearch.org's claims, saying that the merged company would have no effect on airfare pricing because ITA merely processes the information provided by the carriers and that there is enough competition to ITA's pricing platform to ensure a healthy marketplace.
"Giving users better ways to search for flights online will encourage more users to make their flight purchases online, which will create more overall online sales for airlines and travel agencies," Andrew Silverman, Google's senior product manager, wrote on the company's public policy blog on Oct. 26.
At stake is control over a rapidly expanding online travel space. According to Forrester Research, U.S. online leisure and unmanaged travel spending will surge 38%, to about $111 billion, in 2014 from $80 billion this year, while travel companies will almost double their annual spending over that time on online advertising, including search, display advertising, mobile and social media, to about $5 billion.
Among the notable travel companies that haven't joined the coalition are Travelport Ltd. and online travel agencies Orbitz and Priceline.com.
Travelport, which owns the Apollo, Worldspan and Galileo GDSs, is in discussions with U.S. regulators "to ensure that, no matter the outcome, a fair and level playing field remains," said Travelport spokeswoman Jill Brenner.
Orbitz spokesman Brian Hoyt said the company will further evaluate the process and is neither backing nor opposing the proposed merger yet. Priceline hasn't opposed the merger but has said it would be receptive to answering any questions the Justice Department had about the acquisition.
Google agreed to buy ITA in July for about $700 million. In late August, the Department of Justice asked Google for more information about the planned acquisition.