In April, Google (NASDAQ:GOOG) closed its $700 million acquisition of ITA Software, which is a data mega-provider of online travel information. In light of the company’s enormous search business, this is a scary thing for sites like Kayak, Priceline (NASDAQ:PCLN), Orbitz (NYSE:OWW) and Expedia (NASDAQ:EXPE). In fact, the Justice Department required Google to make some changes so as to lessen the competitive impact.
However, with the launch of its new travel offering last week, called Google Flights, the competition should feel safe — at least for now.
Why? To see, let’s take a look at the key features of the service. First of all, users can access Google Flights either from a tab — located at google.com/flights — or through a search query (such as “fly from nyc to las vegas”). You’ll see an interactive map that allows you to view flights for nearby cities. Below this, you’ll also find a list of many flights and their prices. If you like an option, you can click over to the airline’s website.
All in all, it’s pretty cool. And it’s incredibly fast.
But the site has some issues. For example, the flight data is not as robust as rival services. What’s more, the interface still is a bit clunky. Google Flights definitely feels like an early-release version.
But hey, this is normal for the company, right? Google likes to launch quickly, then get feedback. No doubt, it’s a good way to evolve a web service.
Thus, as things get better, should rivals feel more pressure? It’s true that any competition will make an impact. But the fact is companies like Priceline and Expedia have great brands. As a result, search-based traffic is not necessarily critical. Besides, Priceline and Expedia have full-blown services offering rental cars, hotels and even vacation packages. Those companies also have thriving international businesses.
Instead, the losers are likely to be the search-based operators like Kayak and Microsoft’s (NASDAQ:MSFT) Bing. It’s certainly going to be tough to find points of differentiation.
Keep in mind that Kayak has filed to go public and has been in registration for more than 300 days. In other words, in light of Google Flights, it could be a tough deal to pull off.
Tom Taulli is the author of “All About Short Selling” and “All About Commodities.” You also can find him at Twitter account @ttaulli. He does not own a position in any of the stocks named here.
