Harvard Professor Ben Edelman makes a convincing case that Google has a built-in bias toward its own services.
Whether Google is using house ads or filling up white space, you can expect Google to exhibit this form of behavior. After all, it’s no worse than what magazines do with house ads.
Except now that Google is branching out beyond basic free services such as mail, search and calendar, and into ecommerce services, including mapping, telephony and travel, this bias represents a threat to vendors in these areas.
When that benefits the consumer -- i.e. a free service versus paying for something -- then there are no real worries.
In travel, as in most product categories, search is free to the user. But, unlike in other sectors, travel search costs the provider the most as it can be a very complex transaction. This is a function of the GDSs' legacy systems architecture.
This "free" service is used as an inducement to the consumer to use that path for purchase. The assumption in the business model is that where you search is where you buy. At the very least, so many searches can be accommodated by the resulting revenue once the "buy button" is pushed or the agent sells you the ticket. This process is fundamental to the GDS model.
Of course, that doesn't necessarily happen, but the fiction persists.
In conventional product categories this is seen as a marketing cost. In travel this is not so easy to explain away.
Thus, if Google can co-opt that process and provide better or at least competitive free search, but then direct the booking direct or indeed anywhere, then it disrupts the ecosystem. This redirection includes sending customers to competitors or directly to suppliers based on the model of he who pays most -- or games the system through SEO -- wins.
US regulators don’t take a hard stance against these sorts of issues, but elsewhere the impact is considered carefully.
In Europe, the European Community takes a dim view of one company destroying another’s business model. The EC is investigating Google for allegedly harming map vendors, for example.
It is not just its individual activities, but Google's ubiquity that contributes to the problem.
Therefore, consider Google Instant, which already limits search results, particularly in the long tail. And, then there is Google flight search, which would come from ITA Software and include Google’s built-in bias.
It would be safe to say that if Google continued this type of behavior, then a large amount of travel search activity would automatically float over to Google.
This would harm the other search companies such as Bing, metasearch players such as Kayak and Skyscanner, and of course the food chain downstream also gets affected – online travel agencies, traditional travel agents and suppliers.
I believe there is little reason to hope that the US Department of Justice will prevent Google from acquiring ITA Software. Indeed, the DOJ's recent behavior has been to place limitations on some transactions rather than ban them outright.
One small caveat on this. There is a sense of rivalry between the DOJ and the Department of Transportation. The latter overrode the DOJ's objections in approving oligopolies -- namely the granting of Anti Trust Immunity to various airline groupings.
The DOJ just might want to poke the DOT in the eye and do something a little more drastic when it comes to the Google-ITA merger.