Government puts antitrust conditions on Google-ITA Software deal -- but does nothing to protect consumers

Addressing the concerns of Google’s travel industry business competitors but not those of travellers and consumers, the U.S. Department of Justice has agreed to end its antitrust investigation of Google’s proposed purchase of airline pricing software company ITA Software.

Under the deal announced today, the DoJ is filing an antitrust lawsuit against Google, but has agreed to jointly propose a “consent agreement” with Google to settle that lawsuit. (The lawsuit is merely a device to enable the agreement to be enforceable by the court.)

The consent agreement will require Google to continue to license ITA Software’s software and services to competing travel companies. But while Google’s purchase of ITA Software will create powerful incentives for Google to pursue personalized opaque airline ticket pricing, the settlement with the DoJ will do nothing to guarantee that airline ticket prices are transparent or nondiscriminatory.

Everything about the consent agreement with the DoJ is about guaranteeing other travel companies access to airline ticket pricing information (including information about travellers’ purchasing behaviors) from ITA software as a division of Google. There’s nothing in the deal to protect travellers’ access to complete or unbiased price information.

You can’t really blame the DoJ: their mandate is to enforce antitrust law. My finger for this failure points at the Department of Transportation, whose failure to get involved in reviewing the Google-ITA Software is simply the continuation of their policy of nonenforcement of existing federal consumer protection laws requiring airlines to operate as common carriers, publish tariffs of fares and rules, and sell tickets to all comers according to those tariffs.

For more on ITA Software, the threat of personalized (opaque, unaccountable, and potentially discriminatory) pricing, and why this merger is likely to be bad for consumers, see my earlier article on Are common carriers allowed to personalize prices? and the 3-part series I published when the Google-ITA Software merger was first proposed:

1. Google buys ITA Software, Part 1: The back story (12 July 2010)
2. Google buys ITA Software, Part 2: What does ITA Software do? (13 July 2010)
3. Google buys ITA Software, Part 3: What’s it mean for travellers? (14 July 2010)
4. Follow-up: Google is now hosting airline reservations (1 March 2012)