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Google buys travel software company for $700M

/ Source: The Associated Press

Google Inc. plans to buy travel technology company ITA Software Inc. in a $700 million deal that would provide the Internet search leader with more comprehensive information about airline flights.

The all-cash deal announced Thursday could signal Google's intention to mount a challenge to other online travel services such as Expedia and Orbitz.

"There is clearly more room for competition and innovation" in online travel, Google CEO Eric Schmidt said in a conference call. "We will improve the way flight information is organized."

ITA Software, a 500-employee company created in 1996 by computer scientists at the Massachusetts Institute of Technology, provides technology that helps run the reservation systems of several airlines.

Those tools should help Google improve the quality of its search results when people are looking to make airline reservations or possibly book other travel arrangements.

Schmidt said the biggest winners in this deal would be consumers, but he also predicted Google would be able to drive more traffic to airlines and travel agencies.

Bing, a search engine owned by Microsoft Corp., has been picking up more traffic with features that help people figure out whether the prices of airline prices are likely to increase or decrease. Bing Travel is one of several travel-oriented search engines that check multiple sites at once for the best deals and send users to those sites to book there.

The deal is likely to be scrutinized by federal antitrust regulators, given that Google already reigns as the Internet's most powerful company. The Federal Trade Commission conducted a six-month review before approving Google's last big acquisition, a $750 million takeover of mobile ad service AdMob. Google did not immediately say when it expects the ITA deal will close.

Shares in Google rose 41 cents to $439.90 in extended trading Thursday after the announcement. Earlier, shares were down $5.46, or 1.2 percent, to close at $439.49.