Google (GOOG) may buy airline IT and services provider ITA Software, according to Bloomberg. The price of the transaction could be as high as $1 billion.
ITA's customers include online travel booking company Orbitz Worldwide and Microsoft (MSFT). At the core of the company's business model are products used for airline booking sites, reservation systems, and carrier ticket price management.
Bloomberg speculates that Google wants ITA to help it compete with Microsoft and other companies that provide travel and travel-price data online. Presumably this includes getting a chunk of the fees paid to websites that handle airline, car-rental and hotel booking.
Better Buy Than YouTube?
Is this another attempt by the world's largest search engine to diversify beyond its search advertising roots? A number of those initiatives, including YouTube, Google's image search, and Google News may help the company gain or retain some consumers. However, their financial contribution to the search giant, as compared to their operation costs, has been questionable.
At least ITA offers Google a business in which it would be paid for each transaction or a flat fee to power a large airline website. A billion dollars is a lot of money for a niche software business, but it's likely to be a better investment than the $1.65 billion Google spent on YouTube in 2006.
Understanding Stock Market Indexes
What does it mean when people say "the market is up 2%"?View Course »