Rishi

Google has won regulatory approval for its $700 million deal to buy ITA Software, but the Justice Department intends to keep a close eye on the search giant.

The proposed settlement, which still must be approved by a federal judge, requires Google to continue licensing ITA's travel technology to rivals for five years on "reasonable and nondiscriminatory" terms. Some of those rivals, such as Kayak and Hotwire, formed FairSearch.org to oppose the deal.

While that provision was expected, the agency also required Google to forward to it any complaints the company receives from travel competitors upset about where they land in Google's search rankings. It's short of forcing Google to alter its search algorithms, something the company would be loath to do. But it does put the government one step further into Google's core business.

"This is a signal that the department remains concerned about Google's general power on the Internet," said Tom Barnett, former head of the antitrust division of the U.S. Justice Department and a lawyer for Expedia. The travel site is a member of FairSearch.org.

The deal, announced today, requires Google to continue to license software from the Cambridge, Mass., company--which feeds the most popular travel Web sites data--on reasonable terms. That's important to companies such as Expedia, Kayak, and Hotwire, which worry that Google will set up a rival site and not give them information necessary to compete.

The settlement also calls for Google to erect a firewall to prevent unauthorized use of competitively sensitive information and data gathered from ITA's customers.

"The Department of Justice's proposed remedy promotes robust competition for airfare Web sites by ensuring those Web sites will continue to have access to ITA's pricing and shopping software," Joseph Wayland, deputy assistant attorney general of the Justice Department's antitrust division, said in a statement. "The proposed settlement assures that airfare comparison and booking Web sites will be able to compete effectively, providing benefits to consumers."

Google said it is pleased with the outcome. In a blog post, the company said it intends for ITA to operate "with business as usual." The company has also committed to letting ITA's customers extend contracts into 2016.

"We're confident that by combining ITA's expertise with Google's technology we'll be able to develop exciting new flight search tools for all our users," Jeff Huber, Google's senior vice president of commerce and local, wrote in the blog post.

While the bulk of the agreement focused on providing rivals with fair and reasonable access to ITA's software, the provision requiring Google to forward complaints to regulators may be interesting. It promises increased regulatory oversight of the company.

"It gives the Department of Justice some periodic insight into what people think of Google's conduct," said Bruce McDonald, an antitrust lawyer at Jones Day and a former Justice Department antitrust division deputy assistant attorney general. "It could give the department information about complaints that it wouldn't otherwise have."

And that could lead to more action from trustbusters.

The Justice Department also filed a complaint to block the merger in the event that the settlement is not approved. In that complaint, the agency alleges that, "The acquisition of ITA by Google is likely to lessen competition substantially in the market for comparative flight search services in the United States."

That's because Google seems likely to use ITA's technology for its own flight search service, something that would put it in direct competition with the Expedias and Kayaks of the world. "After acquiring (ITA's technology), Google will have the ability and incentive to foreclose competing (travel Web sites') access to (ITA's technology) and thereby weaken the ability of its rivals to compete," according to the complaint.

While Google's travel rivals opposed the deal, they welcomed the settlement that will ultimately allow the acquisition to go through. FairSearch.org hailed the new oversight and enforcement tools as a "clear win for consumers." The group, though, cautioned regulators to continue to monitor Google's behavior. "While this enforcement action is an important victory, Google's abuse of its search dominance still threatens competition and consumers in many critical areas of online services," the organization wrote in a blog post. "Antitrust enforcers and lawmakers in the U.S. and elsewhere must remain vigilant in their investigation of these larger concerns and take whatever further enforcement actions are needed to protect consumers."

With the new reporting mechanism, it's clear that Google's dealings with regulators will only grow. Three years ago, the Justice Department planned to file a suit against Google's proposed search advertising partnership with Yahoo, which led Google to kill the deal. Google also suffered a loss last month when a federal judge shot down a settlement the company struck with authors and publishers in a bid to digitize every book ever published, citing antitrust concerns, among others.

Google is also tangling with regulators in Europe. In November, the European Commission opened an investigation into complaints that it was skewing search results against rivals. Last week, Google's biggest rival, Microsoft, filed a formal complaint with European regulators, alleging that Google unfairly walls off access to content and data from competitors.

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