Deals

Microsoft and Google's war takes to the skies

Microsoft — along with a number of other new companies — has joined an increasingly large bandwagon trying to keep Google from purchasing ITA, a provider of flight information for search engines, for $700 million.

Google is looking to acquire the flight data provider for around $700 million to improve results for Web users making travel plans. The deal seems innocuous enough — Google said it had no plans to sell plane tickets and would direct Google search users to other sites to purchase tickets. Still, a number of companies including travel search company Expedia and Microsoft, which runs search rival Bing, have launched the Fair Search Coalition to try to stop the acquisition.

Keeping Web surfers on search sites for as long as possible has become the new game for search providers like Microsoft and Google. Google’s added a lot of functions to the search engine that offer direct answers. Searchers can drop in simple mathematical equations and questions about things like sports scores and get direct answers on Google’s search page. Google also already embeds some flight data in its search engine, as does Bing.

The acquisition of ITA promises to make Google’s data more accurate and up to date than it already is. That can prove to be the deciding factor that keeps a search user on the page long enough to leave an impression and generate some ad revenue. Multiply that by the number of people who use Google search on a daily basis, and it adds up to a ton of additional revenue for Google. So it makes sense why Google is paying $700 million for the data, and why Microsoft would love to stop the deal and get a slice of that information.

The coalition argues that it would increase prices and drive down competition and business innovation, but it really all boils down to advertising revenue. Travel is a huge part of e-commerce — worth around $80 billion a year, according to the Wall Street Journal report. ITA’s software handles around 65 percent of all e-commerce flight bookings, and travel advertising accounted for about 6 percent of all online advertising revenue, according to the coalition’s website, FairSearch.org. Stealing just a small slice of that — which Google probably already owns a large part of — represents a significant financial gain.