More Controversy: Antitrust Institute Reports on Google/ITA Merger

In a new white paper, the American Antitrust Institute (AAI) examined the complex issues for travel distribution involved with the proposed Google/ITA merger which could lead to an "unregulatable monopoly." The paper explores both the narrow and broad competition issues that are raised by a Google/ITA link up and its impact on airline distribution. It also studied the impact of American Airlines "direct connect" policy and its effects on distribution.

The AAI said Google would own what many consider to be the premier technology that online travel agents, travel meta-search websites, and airline websites license from ITA to afford Internet users the ability to search real-time pricing and seat availability data in the course of shopping for airline tickets online.

"Neither Google nor ITA currently competes in the provision of this data to Internet users by 'online travel search' firms, but together they effectively have such firms surrounded," the institute said. "The Division (Antitrust Division of the U.S. Department of Justice) must acknowledge the risk that Google may acquire market power in the online travel search market or the technology input market, along with the risk that Google's control of ITA would lead to foreclosure or other exclusionary effects, whether directly or indirectly. The Division should also consider whether the transaction might have the effect of raising barriers to entry into the broader online search market, which Google already dominates.

"Apart from the very difficult analysis, this transaction raises broader questions of competition policy concerning Google's rapid growth as a one-of-a-kind firm," said AAI president Bert Foer. "Governmental efforts to protect against manipulation of algorithms by Google are not only likely to be ineffective, but they will necessarily raise First Amendment questions as the government participates in decisions about the prioritization of information reaching the public.

"Maintaining competitive markets for both general and niche search may be the only alternative, ultimately, to an unregulatable monopoly. It is therefore appropriate for the Division,(DOJ) employing a statute intended to stop monopoly in its incipiency, to work within a public vision of longer-term developments and to place the present acquisition within such a context," Foer said.

The paper offers detailed background on the proposed ITA/Google merger and insights into the travel distribution system, GDSs competition and online travel agents. The paper was written by AAI director of special projects Randy Stutz and approved for publication by the AAI board of directors.

Visit www.antitrustinstitute.org.

 

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