Expedia boss warns Google/ITA over bias

Expedia chief executive Dara Khosrowshahi told Wall Street analysts that he is watching how Google uses its “considerable market power” when rolling out products and services based upon its recent purchase of ITA Software.

Speaking on Expedia’s Q2 earnings call, Khosrowshahi said his concern was “if [Google] start favouring their own content and their own results over the results of third parties, whether that’s algorithmic, inside their system or hard coded.”

He added that Google management “in general…has done the right thing” but the government would also be watching this aspect of its ITA integration.

In another question about Google and ITA, he said that the deal would have no direct impact on media and advertising revenues at TripAdvisor, as ITA is an air business whereas TripAdvisor’s revenue comes from the hotel sector.

He was also asked about whether Expedia had any plans to white-label its “Best Fare Search” (BFS) tool to third parties in order to compete with ITA’s QPX tool.

“While we may talk to some potential partners – airlines –  about building out BFS capabilities for them, it is an in-house solution. It would take a fair amount of work to commercialize it for third parties, but we’ll see.”

Khosrowshahi described Expedia Inc’s performance in the second quarter as “solid”, with net income more than three times ahead of Q2 09 at $114.9m.

However, the performance from its European point of sales “was weaker than we would like, in terms of room night growth”. He identified a number of headwinds, such as forex, the volcano, the World Cup and general economic uncertainty as negatives. However, he also said that transatlantic travel was down because of higher air fares. Higher air fares were also proving a drag on its packaging business.

And the usual pattern of weak Europe-to-US traffic being offset by strong US-to-Europe trade did not occur in the quarter. The impact of the volcano equated to a $12m hit to its operating income before amortisation.

The UK was mentioned in terms of a strong performance from Egencia, Expedia’s travel management company. He also talked up new products, such as its recently acquired holidaylettings.co.uk and the launch of air meta-search into the UK market.

Top line figures for the quarter show that globally across all its brands and geographies its gross bookings came in at just under $7bn, 19% ahead of Q2 09. Revenue from this came in at $834m.

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