Travel sites like Expedia (NASDAQ:EXPE) and Orbitz are seeing red over what they perceive as a clear monopolistic advantage for Google (NASDAQ:GOOG). [1] Other travel companies are complaining that Google’s flight search results are being favored over other sites when a user conducts a Google search. Although Google’s ITA acquisition was cleared early this year, the search giant may see some FTC scrutiny again as competitors are up in arms. If Google is indeed intentionally favoring its own results then we will likely see regulatory agencies review this practice.
See our full analysis for Google’s stock
Is Google Bypassing Online Agencies?
According to Google’s own estimates, nearly 60% of consumers use Google search as a way to research travel products and services. [2] This clearly reflects the degree to which sites like Expedia are dependent on Google to get their own traffic. Airlines themselves incur a cost to such agencies if a ticket is booked, and it seems that Google has bypassed this step. Now, if a customer conducts a Google search for a specific flight the user will see all flight results as the first item on the search results, and can then book the ticket directly through the airline’s website. Although it’s still unclear what Google is charging the airlines for this service, if it is less than other agencies it will likely prompt airlines to opt for Google’s ITA-aided flight results instead. If this practice is allowed to continue we believe that it could be a boon for Google, but we do expect further regulatory scrutiny in response to competitor complaints.
We currently have a price estimate near $628 for Google’s stock, which is about in line with the current market price.
Understand How a Company’s Products Impact its Stock Price at Trefis
Notes:- Google Roils Travel, WSJ, Dec 2011 [↩]
- Solutions for Travel, Google AdWords [↩]
