Google’s Flight Search Breaks Promise on ITA Deal, Expedia Says

Google Inc. (GOOG) is breaking a promise made to antitrust regulators who approved its purchase of ITA Software Inc. this year by ranking its new flight information service ahead of rivals, according to Expedia Inc. (EXPE)

Google, which introduced its own flight search service Sept. 13, “excludes any link to online travel agencies, which are key options for comparison shopping,” according to testimony by Tom Barnett, Expedia’s outside counsel, prepared for delivery today at a Senate Judiciary antitrust subcommittee hearing on Google’s business practices on the Internet.

Google, in seeking regulators’ approval for the ITA deal, said it would use ITA technology to “benefit passengers, airlines and online travel agencies by making it easier for users to comparison shop for flights and airfares.” ITA makes software that provides online flight and ticket information aggregated from the airlines.

In his testimony, Barnett says Google failed to live up to that commitment.

Google debuted its flight-search service for a select group of cities including New York, San Francisco, Los Angeles and Dallas. The service offers flight options and links to airlines where tickets can be purchased directly. Links to online travel agencies including Expedia, TripAdvisor LLC and Kayak.com are now lower in the search results, following the so-called ‘Google box’ of flight information. Paid advertisements from travel companies precede the Google-generated flight information.

‘New Version’

The U.S. Justice Department approved Google’s $700 million purchase of ITA on April 9 on the condition that it make airline flight information available to search-engine rivals, put up firewalls protecting client data and let the government review any complaints that it was acting unfairly.

Google’s new service utilizes an updated version of ITA software that isn’t available to others, undermining consumers’ choices, Barnett says in his testimony.

Adam Kovacevich, a spokesman for Mountain View, California- based Google, pointed to terms of the consent decree which don’t require Google to provide outsiders with any technology it develops exclusively for its own use.

“Airlines control how their flights are marketed, so as with other flight-search providers, our booking links point to airline websites only,” Kovacevich said in an e-mail. “We’re working to create additional opportunities for our other partners in the travel industry to participate as well.”

Opposition Group

Expedia along with Microsoft Corp. (MSFT), Kayak.com, and other Google competitors banded together as FairSearch.org to oppose the acquisition of Cambridge, Massachusetts-based ITA, which provides data for online travel sites such as Orbitz Worldwide Inc. and Hotwire Inc. They said the deal would reduce competition and called on the Justice Department to impose conditions for the transaction.

Antitrust scrutiny of Google is broadening. The U.S. Federal Trade Commission is examining whether Google is abusing its position as owner of the most popular search engine, while the state of Texas and the European Commission are conducting their own probes. The Justice Department is reviewing Google’s proposed $400 million purchase of Internet advertising company Admeld Inc. Google has said it is working with regulators to answer their questions.

At today’s hearing, testimony is also scheduled from Google Chairman Eric Schmidt, followed by a panel that, besides Barnett, is slated to include Jeff Katz, chief executive officer of Nextag Inc., Yelp Inc. co-founder and Chief Executive Officer Jeremy Stoppelman and Susan Creighton, a partner with Wilson Sonsini Goodrich & Rosati PC, Google’s outside antitrust lawyer.

To contact the reporter on this story: Sara Forden in Washington at sforden@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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