Search giant Google has agreed to buy ITA Software Inc. for $700 million, giving it a foothold in the fast-growing online travel industry.
Google’s offer beat that of rivals Microsoft and other travel and search related companies who were hoping to prevent Google from taking over ITA.
Cambridge, Massachusetts-based ITA makes sophisticated software for major online travel services such as Orbitz.com and Kayak.com, and airlines such as Continental Airlines and Air Canada. The company’s software uses algorithms to combine and analyze flight information from airlines, including pricing and availability data, to create an up-to-date database that can be searched by consumers.
Mountain View, California-based Google plans to use ITA’s software and expertise to create new tools that will make it easier for users to compare flights and airfares.
Nearly 50 percent of airline tickets are purchased online. The market for online travel services is worth around $80 billion, $44.8 billion of which comes from airfares. By 2014, the market is predicted to reach $111 billion, with the fares segment increasing to $59 billion.
Google has no plans to sell airline tickets directly to consumers, but instead will drive potential customers to airline and online travel agency websites.
Commenting on the deal, Eric Schmidt, chairman and CEO of Google, said: “ITA’s very talented team has created an impressive product to organize flight information. Their technology opens exciting possibilities for us to create new ways for users to more easily find flight information online, and we’re looking forward to welcoming them to Google.”
Jeremy Wertheimer, CEO and president, ITA Software, added: “It is a privilege to work with a most skilled and dedicated team to build innovative technologies that people use every day. We are all looking forward to continuing and expanding our efforts as part of Google.”
The deal is Google’s sixth-largest acquisition in its history, and is likely to attract the scrutiny of US antitrust regulators, because it would combine the largest search company with a dominant travel search site. However, Google’s rival Microsoft has had relative success in travel search, which could help Google clear the antitrust process. Microsoft already has a travel area within its Bing search service that uses ITA software and features tools like ticket price predictors.
ITA was founded in 1996 by computer scientists from MIT and raised $100 million in venture capital 10 years later. Today, the company has 500 employees.
Founded in 1998 by Stanford PhD students Larry Page and Sergey Brin, Google is a leading web property in all major global markets. The company is headquartered in Silicon Valley with offices throughout the Americas, Europe and Asia.
