This was not going to be a quick and short post as I could use all my Professor skills to analyze the issue. However in starting to do some research on the subject I went back and visited some of my old posts on the subject. I have long felt that Google was already a monopoly in Travel before the acquisition. Troogle has a hot topic in 2008 and 2009. Then the chatter died down. So I reprint here for your edification and reading pleasure a post I did last year on the subject on what I think the Obama Administration is planning to use as a frame of reference on Google’s activities in travel.
Here are a few salient points.
1. I believe that the review time will take more than Admob. In the case of Admob – there are a large number of different options and it is a nascent business too early in its cycle to say that there will be a single business who can dominate.
2. Travel is a more defined category and the tentacles of the dark side that Google has become stretch far and deep and wide.
3. US law will prevail and US law is very specific in this area of what defines monopoly and how it can impact the transaction. (see below)
But – I want to be clear that I do not necessarily believe that Troogle will be bad for the industry. There are now clear winners and losers who will be impacted by the transaction. The world of GDS dominated distribution for one is probably headed for the sunset. The cost structure of meta-search on both the supply side and the seller side will be seriously impacted to the point where meta search may become irrelevant.
So what do you think? Let me know directly or privately.
Cheers
REPRINT POST August 31st 2009:
[Professor Sabena's Blog] Is Google A Monopoly?
I have this uneasy feeling about Google. The power they wield is significant. Fine if they don't abuse it - or is it? And what if they do actually use their power and abuse it?
I have written columns on this going back to 2006, here are two of my older posts on the subject:
http://t2impact.blogspot.com/2006/10/that-giant-sucking-sound-is-google.html
http://t2impact.blogspot.com/2009/08/is-google-new-evil-face-of-it.html
It seems that the Seattle Times and other Media outlets have started to feel the same way too. Today's editorial was somewhat less than subtle. The Times (a right wing paper in my view since it crushed the old Seattle PI), is calling for Google to be investigated for being in violation of the Sherman Act.
http://seattletimes.nwsource.com/html/editorials/2009766680_edit31google.html
A quote from the Obama Administration assistant attorney general for antitrust, Christine Varney, as saying that Google was America's most obvious antitrust problem — Microsoft was "so last century" she said... ouch.
The editorial called for an investigation of Google under the Sherman Act. Section 2 which says:
Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony...
That has been the law of the United States since 1890. All it requires (per the Seattle Times) is that the Justice Department pick it up and use it.
Should we accept that Google is being altruistic all the time or is there something more sinister about Google? It seems that Google's hand has to be forced sometimes - hardly the behavior of a good global citizen.
For my own part - I am happy to use the Google search engine but I remain leery of Google's force in the market. It is downright scary the amount of power they have.
So what do you think?
Cheers
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Posted By Professor Sabena to Professor Sabena's Blog at 8/31/2009 12:36:00 PM
Why Troogle Google?
With the Google + ITA acquisition now public, we can now evaluate how this will impact the world of travel. As I wrote in the 3 part series on search,(INSERT LINKS HERE) I have long felt that search was akin to an unnatural act and one that left the customer un-satisfied. I also opined that failure of the travel industry in its own right to address its deficiencies in search would open the world to Google coming in and changing the way search is addressed. But I regarded that while not necessarily as a bad thing for the consumer – it would change the dynamics of the Travel Industry Sector.
In the 3 part series I wanted to evangelize the concept of natural search. This did not mean that navigation to specific elements of travel was a bad thing, but the overly explicit nature of search in travel has long been too constrained by – in my opinion – a GDS like constrained process.
In my view the convergence of some key factors would drive change in from conventional search to natural search.
• The consumer-facing conventions make it possible
• Loosely coupled technology through mash-ups breaks the bonds of the supply controllers who held sway far too long over travel
• It also makes it far easier to make everything work – less dependency on making sure the tightly choreographed ballet of interlocking pieces actually function. Banish the word “seamlessly”. But don’t drop the word fast.
• Geo-location – mapping is finally ubiquitous.
• The line between mobile and fixed position makes the definition between the two largely irrelevant
• The supply side has better infrastructure and processes (not to mention better technology) to support Natural Search.
• The Cult of Individualism is a natural state and a natural act.
Over time the GDS based model has shown itself to be a false profit for the consumer’s need for access to information. As a result the GDS imposed workflows in search/shop became the highly constrained standard because it was necessary in order to get access to the final mile of the transaction namely the price/book/ticket.
Search and Shop outside of the GDS model suffered from a lack of trust. The various attempts by Meta search companies such as Kayak etc resulted in a permanent time delay of salient information. Thus you, the consumer could never shop in a trusted mode. And suppliers wondered why consumers didn’t have loyalty and trust??? With Troogle there are now several of these elements consistent and the results can be very different and trustworthy. This in my view is what the Google management team meant when they said they were “… building something that the industry has never seen before."
At WIT this year – I will expound on this subject and illustrate what I believe will be a way to address this.
But I think I made it abundantly clear that if Google had a mind to they would use some of their clout (and considerable cash pile) to address the subject and hurry the process along.
Commercially you have to ask why would Google plonk down $700 million in cash for ITA.
• Could it be for their revenue and commercial basis? If that was the case then the transaction would be up there with Sabre’s purchase of GetThere at $757 million at the height of the Internet Boom. So no not that alone – but over time Sabre was able to dominate a sector.
• If it was for the technology alone – I am sure that someone could replicate this for a lot less money. And indeed in my opinion at least one company has.
• Could it be for their Intellectual Property? ITA has a considerable number of important patents that I have previously stated could be very tough for the industry to challenge. Not that they should not be challenged but that the clout of Google and its legal team would make the relative minnows in travel hard to stomp up the cash for a protracted legal challenge.
• Could it be for their Hotel and/or Needlebase technology? Hardly try and play with it. It’s nice but hardly makes a dent in $1-2 million let alone that number of zeros.
• Could it be for their customer base? Very important – but not perhaps in the way you may think. ITA provides assured access backed by both technical and commercial service agreements that ensure that the data they provide is current. With Virgin Atlantic now joining the group of QPX users – the spread of Full Service carriers is broadening considerably. Yes there is a nice value to this one.
• Could it be the value of disintermediating several players in travel? Ah now you are talking. Consider the annual revenues for legacy GDSs and that number is big and very fat and ripe for diverting Google’s way.
• Could it be for eliminating meta search players with better solutions? This is an obvious answer. Yes but not the prime one.
• Could it be for filling the holes in some Machiavellian plan to dominate the Travel Industry? Hmmmm time will tell the answer to that question. Does it match Google’s vision of the world. Absolutely!
But are these enough? The correct answer is of course all of the above, and many more I have not outlined here.
Now the challenge is how to deal with the whole notion of the travel process from ideation through to sale. The world just changed and you and I have to change with it.
Cheers
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