One of the dramas going on in Washington is the antitrust analysis proceeding regarding the buyout of ITA Software by Google. Basically, Google, which has the most in-depth knowledge of passengers, is looking to purchase ITA Software, that powers every online travel agent created since 2001 and knows more about the airlines than perhaps any other entity. This is certainly a case for a careful antitrust examination and federal regulation, something Google isn’t used to.
Reports have been bandied about that perhaps as many as 50 to 70 percent of airline and travel searches begin on Google. That makes this kind of a purchase a big deal.
Any article about the Google purchase of ITA Software can go on for pages and will certainly be discussed further on this website and in other media. Today I want to bring up the unique emerging role of DOT in a post-Google/ITA world.
Until now, DOT has been the sole judge and jury for consumers and the airline industry for anything to do with civil aviation. Federal preemption has basically excluded any airline customer-service issues from being handled through small claims or state courts; and contracts of carriage, bereft of any consumer specifics, have rendered even those who brave the federal court system impotent.
Because of these severely limited legal standings, DOT fills a very specific and important job within the government. It alone makes the rules and it regulates operations of the entire aviation industry from airlines to ticket agents. The definition of airlines is relatively understandable to outsiders. However, the definition of “ticket agents” is not as intuitive. As accepted in precedent and settled law “ticket agents” include the behind-the-scenes entities such as Sabre, Amadeus and Travelport that don’t actually sell airline tickets, but who as “agents” enable ticket sales.
According to the district court findings in the 2005 Sabre vs. DOT case, the legislative history clearly shows “that Congress sought to bring all intermediaries involved in the sale of air transportation under federal administrative control.” This court ruling mandates that all GDSs and the proposed Google/ITA entity will fall under the regulatory control of DOT.
This means that Google’s buyout of ITA Software, should it be consummated, would fall smack in the the sweet spot of DOT regulation.
In the Google lexicon, regulation is a four-letter word, moreso in any future business campaigns like an assault on the travel industry. But, regulation is what Google will get and that secretive black-box model that has served Google so well will have to be opened up to the DOT enforcement team on New Jersey Avenue next to the Navy Yard.
What can DOT regulate?
What DOT controls are airline and ticket agent actions that are considered unfair and deceptive. Let’s remember that Google is in business to serve its advertisers. Though the company claims to be serving web users, they make the bulk of their money from advertising — their real job is to serve their advertisers. Consumers come second.
DOT’s mandate in this situation is crystal clear — protect legally defenseless consumers. One of the mantras of DOT has been unbiased displays of airfares. This has been a battleground upon which DOT has repeatedly prevailed.
Consumers, according to DOT should be provided clear and comparable airfares from which to make informed choices between different airlines. Google may not always plan on playing the game that way with its search results. Truth be told, no one really knows how Google serves up search results or what their algorithm might be for publishing Google ads. With an approval of the Google purchase of ITA Software, the Internet world may get its first peak behind Google’s search processing curtain.
The Google way might include offering different airlines a different set of consumers for their ads based on the kind of customers an airline wants and perhaps integrating frequent flier information into the search algorithms.
The Google way might serve your search query to an airline who bid the highest for the ad.
The Google way will not necessarily allow consumers full choice of all airlines and combinations. Who knows?
The Google way may use its insider knowledge of travelers gleaned from searches, gmail, Google groups, Google phone calls and Google maps to “tailor” vacations for us? What if we don’t want our vacations “tailored”?
Will airlines be able to buy their way into our “secret” Google records that have been kept from the first moment any Web user decided to shift to Google for search, then email, then groups, then shopping.
DOJ should confer with DOT to learn what regulatory constraints on a Google/ITA entity would be realistic? Plus, they together with the FTC should start a discussion with DOT about privacy issues and Web tracking issues as they apply to airline fare displays in a post-Google/ITA world.
A reasonable step might be orchestrating a meeting between Justice, Transportation and Google to see how open Google intends to be with its travel search offerings. Another step should be between Justice, Transportation and the FTC to strengthen privacy protections as Google — the company that collects more personal data than anyone else in the world — dives into the travel vertical.
This is only the beginning. More questions pepper the path to approval of the Google/ITA buyout. But let’s make sure that DOT can protect the American public from Google and its zeal to serve its advertising customers rather than consumers.
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
