Antitrust Lawyer Blog Commentary on Current Developments

DOJ Conditions Google’s Acquisition of ITA Software by Requiring Google to Develop and License Travel Software

On April 8, 2011, the Department of Justice (“DOJ”) filed a civil antitrust lawsuit in U.S. District Court in Washington, D.C., to block the proposed acquisition of ITA Software Inc. (“ITA”) by Google Inc. (“Google”). At the same time, the DOJ filed a proposed consent decree to resolve the DOJ’s antitrust concerns. The settlement requires Google to develop and license travel software currently owned by ITA, to establish internal firewall procedures and to continue software research and development pursued by ITA. Google will also be required to provide mandatory arbitration under certain circumstances and provide a mechanism for complaints if Google acts in an unfair manner.

The DOJ believes that the settlement will protect competition for airfare comparison and booking websites and ensure those websites using ITA software will be able to compete against airfare websites Google may introduce in the future. According to the DOJ, the acquisition, as originally proposed would have substantially lessened competition in the airfare search websites market.

Under the proposed settlement, Google is required to continue to license ITA’s software to airfare websites on commercially reasonable terms. Google will also be required to continue to fund research and development of that product at least at similar levels to what ITA has invested in recent years. Google will also be required to further develop and offer ITA’s next generation InstaSearch product, a tool to provide near instantaneous results to certain types of flexible airfare search queries, which is still in the development stage at ITA. Furthermore, Google will be required to implement firewall restrictions to prevent unauthorized use of ITA customer information and to prevent abuse of commercially sensitive information. The proposed settlement delineates when and for what purpose that data may be used by Google. Google is also prohibited from entering into agreements with airlines that would inappropriately restrict the airlines’ right to share seat and booking class information with Google’s competitors.

This settlement is noteworthy for several reasons. First, it demonstrates that the DOJ believes that Google is a monopoly, and, therefore, Google requires special attention. Within the past 2 ½ years, the DOJ has taken numerous actions against Google. The DOJ blocked Google’s joint venture with Yahoo; entered into a settlement with Google regarding its collusive agreement with other tech companies not to hire each other’s tech talent; and opposed the Google book settlement. Second, even though there was no horizontal overlap between Google and ITA software in the competition for airfare comparison and booking websites, the DOJ was concerned about competition in a market that Google does not yet compete. In the past, the DOJ passed on vertical situations as the DOJ would have an opportunity to bring a conduct case sometime in the future if anticompetitive conduct ever occurs. With Google, the DOJ is taking a proactive approach. Third, the DOJ is interested in taking a regulatory approach with Google and possibly other tech companies with market power. While the DOJ rather use structural remedies to resolve antitrust concerns raised by mergers, this settlement agreement demonstrates that the DOJ is willing to police Google’s activities going forward.


Andre Barlow

(202) 589-1834
abarlow@dbmlawgroup.com


Yolinda Qu

(202) 589-1834
yqu@dbmlawgroup.com