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Google to buy ITA travel software firm for $700 million

July 1, 2010 |  3:24 pm

Google Inc. said Thursday that it would buy ITA Software for $700 million in cash, but acknowledged the acquisition could hit turbulence.

Regulators are likely to take a hard look at Google’s plans to fold the flight-information software company widely used by the travel industry into its Internet search engine.

Rumors of the acquisition that had been circulating for several months had unnerved other industry players, which worry that it would hand Google too much influence. Several, including Kayak.com, had competed to buy Boston-based ITA but were outbid.

ITA is used by airlines, travel agents and websites such as Hotwire and Microsoft’s Bing. It offers flight times, availability and prices.

On a conference call Thursday, Google executives described the deal as “pro-consumer,” benefiting passengers by making it easier for them to comparison shop for flights online. But they said they expected U.S. regulators to scrutinize the pairing of the world’s largest search engine and the dominant travel software company.

"Airline tickets online is a very large business, and of course a global business," said Google Chief Executive Eric Schmidt, "but I don’t know about you all, but when I do it, I find it sort of frustrating. The prices are changing constantly. The availability is changing all the time. There’s so many thousands of options, even for a simple itinerary. Users are going between multiple websites and ultimately not a very good user experience, although people trying make this better.”

“So when we looked at it, we said we still had more room for competition here and innovation,” he said.

Schmidt said it was too early to say how Google would approach the travel search business. The Internet giant argues that the acquisition would drive more business to airlines and online travel agencies.

"We are quite certain that by improving search we will get more people online. The economic structure, we will sort out later," he said.

ITA was founded in 1996 by a team of MIT scientists. It raised a $100-million round of funding in 2006 from venture capital firms Sequoia Capital, Battery Ventures and General Catalyst.

The deal signals Google’s serious interest in becoming a major player in travel, a hub of online commerce including search.

“With Google, we think we will have access to the scale, both of technology and of other bright people to work with, to help really take this to the next level,” ITA’s CEO Jeremy Wertheimer said.

 -- Jessica Guynn

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