Google and ITA Back in the News as Kayak IPO Announced
Last summer, Google announced it would be acquiring ITA software for 700 million dollars. ITA software is used by some of the world’s most successful travel companies, including American Airlines, Southwest Airlines, United Airlines, Continental Airlines, Bing, Kayak, and Orbitz. Essentially, it controls the data that makes airfare searches possible by processing and publishing airfare-related and travel search data.
Yesterday, Kayak announced plans for an Initial Public Offering. Since ITA powers Kayak’s air search, one of the IPO risks is that Google will launch an airfare search product that competes directly with Kayak. Another risk is that Kayak licenses its faring engine software from ITA. In fact, according to Kayak, ITA “provided approximately 42% of our overall airfare query results for the nine months ended September 30, 2010.” That contract expires at the end of 2013.
With the online travel industry vehemently opposed to ITA-Google deal, it is unclear whether it will be approved by the Justice Department. What it means for the Kayak IPO is also TBD.