Inside Google

Google’s efforts to expand its search advertising business into the online travel sector now faces the combined opposition of its competitors.

From the Wall Street Journal:

“Expedia Inc., Kayak.com, Sabre Holdings and Farelogix Inc.—which operate half-a-dozen leading online travel sites—are forming a coalition called FairSearch.org to persuade the Justice Department to block Google’s latest deal.”

The online travel sector is trying to block the search giant’s purchase of ITA Software Inc., leading provider of travel data online, which was announced last summer. Spokemen for the companies say Google has signaled its intention to deny them ITA software in the future which would effectively put them out of business. The Justice Department anti-trust lawyers have been reviewing the ITA purchase ever since it was announced.

The campaign against Google is another reminder that policy decisions in Washington are crucial to the company’s efforts to expand beyond its search advertising business which still provides 97 percent of its revenue.

In 2007 the Federal Trade Commission approved Google’s purchase of DoubleClick , the online advertising server. The decision and resulting acquisition helped power Google’s 32 percent increase in profits in the 3rd quarter this year and a diversification of its revenue streams.

From AP via Newser earlier this month:

“During a conference call with analysts, Google said sales of its display ads, which include those on YouTube, are on a pace that would translate to $2.5 billion annually. Its mobile advertising businesses are on pace to bring in $1 billion in revenue annually. The figures are the most specific Google has released about the two emerging businesses.”

But Google’s ambitions have also been crimped by government action. In November 2008, the Bush Justice Department blocked Google’s proposal to share online advertising with Yahoo by threatening to file a lawsuit challenging the joint venture. Google and Yahoo canceled the deal.

The rival travel sites hope the Obama administration will do the same for the Google-ITA deal

The ITA deal poses a the first big test of what Christine A. Varney, chief of the antitrust division, really thinks of Google’s market power. Before Obama was elected, Varney said she was “deeply troubled” by the DoubleClick deal and suggested that Google might next be the next Microsoft  in terms of monopolistic behavior.

If Varney still thinks that, Google’s travel dreams may not get off the ground.