Google acquires ITA: the online travel world just changed
ITA is the GDS of the future; the best, most dynamic, most admired airfare system in the world. Finally the rumours are confirmed: it's now part of Google for a cool $700M. The MIT computer scientists behind the company should feel right at home !
If you are in the business of providing the world with all the data it may ever need, there is no reason not to get into travel. News, products, maps, travel. It's a fairly ubiquitous and generic good that is monetizable through search and comparison. What a great way to diversify revenues away from performance search. Most Google watchers expected the company to make a move into travel, and it's now done.
The beauty of travel search is what it tells you also about intent. Let's the travel agents fulfill, but as a context engine it's just great. Lead gen revenue, ad revenue, intent capture on top.
In Google's communication, the focus is very clearly put on QPX, the underlying engine, presented as an open airfare platform. You can see Google's competition concern in this: the company is at pains to illustrate how competitive the GDS world is (see below), how committed it is to ITA's existing QPX customers (which presumably include the Gorilla in the space, the $1BN Kayak)
I would say that list of competitor looks pretty weak compared to QPX. Expedia's internal BFS and who ? Everbread ?
I find the notes on "what we aren't doing" enlightening:
- Setting airfare prices. Airfares are set by the airlines and online travel agents alone. ITA Software merely analyzes and organizes information about flight options, availability and fares.
- Selling airline tickets. Google has no plans to sell airline tickets directly to consumers, but instead will drive potential customers to airline and online travel agency websites.
- Locking out competitors. We are very excited about ITA Software's QPX business, and we're looking forward to working with current and future customers. Google will honor all existing agreements, and we're also enthusiastic about adding new partners.
- Changing market shares. Because Google doesn't currently compete against ITA Software, the deal will not change existing market shares.
Some interesting points to look at:
- Sure Google wants to be the front-end search and comparison engine, but it's also de facto in the business of providing data services now.
- There is direct dig at Kayak with highly selective editing: "Kayak's CEO called BFS "awesome"" (he also said it was not productised and lacked the best and whistles of ITA, never mind). How's that for using a competitor to demonstrate competition exists. Business Insider goes for the obvious line saying the acquisition blows a hole in Kayak. I think there is going to be quite some time before Google catches up.