Attention from regulators may be costing Google business

Steve Henn Jan 14, 2011
HTML EMBED:
COPY

Attention from regulators may be costing Google business

Steve Henn Jan 14, 2011
HTML EMBED:
COPY

TEXT OF STORY

Kai Ryssdal: If you’ve ever bought an airline ticket online — and by now that’s probably most of us — you’ve used the services of a company called ITA. It supplies airline pricing and scheduling information to most of the big travel websites. I told you that as a way to set up this.

There’s word today that the U.S. Justice Department is taking a long hard look at Google’s plan to buy ITA. By now Google’s no stranger to working with government lawyers. Kind of comes with being Google.

But Marketplace’s Steve Henn explains, attention from regulators in Washington is already costing the big company big business.


Steve Henn: Last year Google bought more companies than any other firm in the United States. But buying its way into new markets is getting harder. Just look at the reaction to Google’s attempt to purchase of ITA, a travel data firm that most people have never heard of. Pamela Haurbor Jones is a former FTC commissioner.

Pamela Haurbor Jones: Google could manipulate the marketplace. They could place their own travel search results at the top of every page after a search query.

Google is the Internet giant everyone is afraid of. So Microsoft, Travelocity and others launched an intense lobbying campaign to quash the ITA deal.

Greg Sterling is an Internet analyst at Opus Research.

Greg Sterling: Google is going to attract scrutiny in high-profile cases where it is trying to buy market leaders or high-dollar-value deals.

This is not new. But it’s making companies think twice before doing a deal with Google.

Today companies that Google tries to buy routinely demand huge “kill fees” that guarantee big payments even if regulators in Washington quash a merger. Last year, AdMob demanded a $700 million kill fee on a $750 million deal. Groupon, the social-shopping site, wanted a multi-billion dollar guarantee before it would agree to a $6 billion dollar Google takeover. That demand killed the deal instead, long before regulators got involved.

In Silicon Valley, I’m Steve Henn for Marketplace.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.