Why Google’s Opponents Are OK With The ITA Merger

The reaction to news of the Google-ITA approval has an odd twist: Google (NSDQ: GOOG) and some of its fiercest competitors are both crowing about their victory. Is it really possible that both sides are content with the merger and the conditions crafted by the Department of Justice? Maybe, but on a call with reporters this afternoon, representatives from Expedia and Kayak, speaking on behalf of the FairSearch.org coalition opposing Google’s moves on travel search, provided some insight into why they’re sounding so upbeat: they’re hoping for additional government action against their giant search competitor.
“We see the Justice Department deciding to impose antitrust restrictions on Google as quite simply a win for consumers,” said Robert Birge, Chief Marketing Officer for Kayak. “There’s quite a lot more to happen on this.”
Asked why they’re happy when Google is touting the deal’s approval as a win, Tom Barnett, a lawyer with Expedia, said: “As antitrust officials look at those issues, there’s some telling signs that give you an indication of what may come… They took an enforcement action in a vertical merger. That’s unusual. They did that because of google’s power in search dominance.” The DOJ complaint against Google (which was filed today, but together with the settlement) references antitrust action against Google in Texas and Europe, which Barnett–formerly a lawyer with the DOJ’s antitrust division–also took as a hopeful sign. “I do think there’s sufficient basis to open a broader investigation.”
So what additional action are these Google competitors looking for? Most likely, an investigation or lawsuit around Google’s dominance in the general search field. In their view, that was one aspect that wasn’t addressed in this agreement. As Barnett explained: “Google may well be using its dominance in general search engine to foreclose the ability of other sites to get visibility on the web, and to steer users to Google’s own sites, in a way that might be anti-competitive. When you have a company that’s that large, that powerful, that’s expanding its dominance–the question is whether it’s doing so in a lawful manner.”
That’s not the only reason why the deal works for them. They also sounded genuinely satisfied with the tough regulations that DOJ has put on the deal–despite the fact that those conditions expire in five years. Those include requirements that Google continue to invest in the relevant software, and license it to competitors on fair terms. The company also will have to implement firewalls to prevent use of competitors’ private information.
Effectively, the Justice Department has taken a major step towards imposing real regulations on at least the travel part of the search industry. Together the the recent privacy rules imposed on the search company by the Federal Trade Commission, we’re seeing a much stronger government interest in regulating Google.