Axinn, Veltrop & Harkrider and Wilson Sonsini Goodrich & Rosati, counsel for Google, retained Cornerstone Research and Professor Timothy Bresnahan of Stanford University to analyze the competitive and efficiency effects of Google’s $700 million purchase of ITA Software (ITA). Google, supplier of a leading Internet search engine, agreed to purchase ITA, a provider of flight search software used by airlines, such as American and United, and travel websites, such as Orbitz, Kayak, and Bing Travel. Through this acquisition, Google plans to offer new and innovative flight search services for consumers. In reviewing the transaction, the Department of Justice (DOJ) expressed concerns that Google might seek to deny flight search rivals’ access to ITA’s software or charge them higher prices for using ITA’s software.
Professor Bresnahan and Cornerstone Research conducted extensive analyses of competition, market structure in flight search, and merger-specific efficiencies issues, research that required analyzing pricing and cost data from ITA and Google. Professor Bresnahan and Dr. Michael Topper, a vice president of Cornerstone Research, presented the results of these analyses to the DOJ, demonstrating the potential innovations and cost reductions that would be unlocked by this acquisition and that Google has neither the ability nor the incentive to foreclose users of ITA’s software. They showed that any attempt to foreclose would be defeated by competition from other providers of flight search software and other providers of flight search services.
After an extensive review, the DOJ approved the acquisition, conditional on certain licensing and other commitments by Google.