What Google’s $700M Acquisition of ITA Means to Boston, and to Competition with Expedia, Bing, and Kayak

This deal has a little bit of everything. A compelling startup story, technology used by millions of consumers, big company strategy and competition, antitrust issues, and, on top of all that, a really significant local innovation angle.

I’m talking, of course, about last week’s $700 million acquisition of Cambridge, MA-based ITA Software by Google. ITA’s technology powers the flight itinerary search and pricing engines for major airlines and travel sites like Orbitz, Kayak, and Bing Travel. Yes, this deal means Google, the Internet search king, is now trying to carve out a specialty in the lucrative travel search business, for better or worse. (For more reportage on the deal, you can read the New York Times, Bloomberg, Wall Street Journal, Forrester Research, Tnooz, and others.)

Unfortunately, Google and ITA aren’t saying much of anything interesting publicly. It’s probably hopeless to guess what Google’s true intentions are, or why it waited until now to enter the sector. Travel search is an area in which Microsoft took an early lead over Google in 2008, after the Redmond, WA-based software giant acquired Farecast, a Seattle-based airfare predictor startup. My guess is that Google is staying mum partly to keep its competitors in the dark, and is allowing ITA some time to adjust to its new owner.

So instead of talking to the principals on the record, I’ve been talking with outside sources in the travel and consumer tech industries. The impact of the deal is definitely being felt all around the country, including in the Seattle area, which is known for its travel giants like Expedia and Bing Travel, and upstarts such as InsideTrip, Raveable, Yapta, TripHub, Off & Away, and TravelPost.

Here are three threads to watch, both locally and nationally:

1. Google just got much bigger in Boston.

If you’ve been away from the MIT area for a couple years, like I have, you’ll find things have really changed when it comes to the search giant’s presence. First of all, Google’s Kendall Square office has been growing fast since late 2007, when it had about 100 employees. Now the ITA deal—assuming it passes a federal antitrust review—means Google will have a huge presence in Kendall Square, more than doubling its local staff. Adding roughly 500 new employees from ITA should have a

Pages: Page 1, Page 2

Author: Gregory T. Huang

Greg is a veteran journalist who has covered a wide range of science, technology, and business. As former editor in chief, he overaw daily news, features, and events across Xconomy's national network. Before joining Xconomy, he was a features editor at New Scientist magazine, where he edited and wrote articles on physics, technology, and neuroscience. Previously he was senior writer at Technology Review, where he reported on emerging technologies, R&D, and advances in computing, robotics, and applied physics. His writing has also appeared in Wired, Nature, and The Atlantic Monthly’s website. He was named a New York Times professional fellow in 2003. Greg is the co-author of Guanxi (Simon & Schuster, 2006), about Microsoft in China and the global competition for talent and technology. Before becoming a journalist, he did research at MIT’s Artificial Intelligence Lab. He has published 20 papers in scientific journals and conferences and spoken on innovation at Adobe, Amazon, eBay, Google, HP, Microsoft, Yahoo, and other organizations. He has a Master’s and Ph.D. in electrical engineering and computer science from MIT, and a B.S. in electrical engineering from the University of Illinois, Urbana-Champaign.