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Friday, July 2, 2010

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 $700 million in cash for the Cambridge, Mass.-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.

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