Google's acquisition of ITA may catch regulators' eye

The Mountain View, California based behemoth could face regulatory scrutiny given its immense market share in Internet search industry.

"I would expect that it would be a significant review," Google Chief Executive Officer Eric Schmidt said.

The CEO however declined to conjecture on the timing of when the acquisition will be complete.

Focus on end users
The proposed acquisition has frightened the travel industry as players apprehend that Google could attain the expertise and wield a lot of authority in the sector.

ITA Software garnered a whopping $100 million round of funding in 2006, from investors including venture capital firm Sequoia Capital.

Google beat other bidders like Expedia, Kayak.com and Travelport to bag ITA.

Caris & Company analyst Sandeep Aggarwal said, “Google's number one competitor has been successful by penetrating some of the verticals, and travel is one of them. This Google ITA deal is motivated by both offensive and defensive reasons."

By acquiring the privately-owned ITA Software, Google intends to revolutionize the way consumers look for flight and fare information online.

"What we're going to do is build new flight search tools that focus on end-users," Schmidt said.

Google executives termed the deal to be "pro-competitive" and "pro-consumer".

Barclay's research believes, "Google's agreement to acquire ITA represents a strategy shift as Google may now feel more urgency to pursue vertical search opportunities given slowing core search growth."

Competition with Microsoft
The deal with ITA will also allow Google to match the modernization incorporated by Microsoft Corp in its recently re-launched Bing search engine.

Bing has gained considerable share by aiming at few, specific search categories like travel and shopping.

Caris & Company analyst Sandeep Aggarwal said, “Google's number one competitor has been successful by penetrating some of the verticals, and travel is one of them. This Google ITA deal is motivated by both offensive and defensive reasons."

At present, travel-related searches account for 10 to 12 percent of Google's revenue.

Google has just closed its $750 million acquisition of mobile advertising firm AdMob. The said deal was also closely scrutinized by federal regulators. Eventually Google has got a go-ahead.

Richard Brosnick, an antitrust expert with Butzel Long opined that the government would enforce certain conditions before approving the ITA deal.

Andrew Gavil, a law professor at Howard University in Washington, opined that the purchase is an expansion of Google’s existing business, not an instance of one player buying a rival and therefore it’s improbable the ITA acquisition will face “significant antitrust concerns.”

If Gavil is proved wrong, the regulatory process would be initiated and it could take six months or more for the deal to close.