Google Inc plans to buy one of the Web's key providers of airline travel software for $700 million, potentially raising new antitrust concerns for the world's largest Internet search engine.

Google said on Thursday that it had agreed to buy privately-owned ITA Software, in a move that Google said would allow it to improve the way consumers find flight and fare information online.

What we're going to do is build new flight search tools that focus on end-users, Google Chief Executive Officer Eric Schmidt said in a conference call with analysts and members of the press on Thursday.

He said that Google had no plans to sell airline tickets to consumers and that Google planned to honor all existing agreements that ITA has with its partners.

The deal should allow Google to match innovations made by Microsoft Corp, whose recently re-launched Bing search engine has gained share by focusing on a handful of specific search categories like travel and shopping.

The deal, which was reported to be in the works for weeks, has unnerved travel industry players worried that Google could end up wielding too much influence in the sector.

ITA, which has roughly 500 employees, provides software that organizes flight information like fares and flight times. The company is a major source of information about airfares to the aviation industry, used by airlines, travel agents and other sites including AMR Corp's American Airlines, Continental Airlines , Hotwire, Kayak, Orbitz and Microsoft's Bing.

Google beat out reported bidders Expedia, Kayak.com and Travelport.

On a conference call on Thursday, Google executives called the deal pro-competitive and pro-consumer but said it expects that U.S. regulators will examine the deal's implications closely.

I would expect that it would be a significant review, said Schmidt. He declined to estimate when the deal would close.

The ITA deal comes shortly after Google closed its $750 million acquisition of mobile advertising firm AdMob. That deal was held up for several months by regulators, but ultimately approved when the Federal Trade Commission concluded that Apple Inc's nascent mobile ad business would keep the market competitive.

Antitrust lawyers said they expected the Google-ITA deal to be scrutinized by regulators, but ultimately approved.

I would be surprised if this transaction were blocked, said attorney Richard Brosnick, an antitrust expert with Butzel Long.

He said that the argument against the deal is not that it would make Google dominant in the field, but that Google could use its power to hurt other online travel companies like Expedia and Orbitz.

Brosnick said he expected the government to enforce certain conditions before approving the deal, such as requiring that Google/ITA continue to deal with Orbitz and others on even terms.

Google executives said on Friday that it was too soon to say exactly how the company would incorporate ITA into its search service, or how it might make money from ITA's flight information.

Caris & Company analyst Sandeep Aggarwal said that travel-related searches currently accounted for 10 to 12 percent of Google's revenue, which totaled almost $24 billion in 2009.

But he said that Microsoft's advances in its online travel search service, including its 2008 acquisition of the FareCast travel information service, had forced Google to bolster its own travel capabilities.

Google's number one competitor has been successful by penetrating some of the verticals, and travel is one of them, said Aggarwal.

This Google ITA deal is motivated by both offensive and defensive reasons, he said.

Google shares, which slid 1.2 percent on Thursday to $439.49 in a weak market, were unchanged in after-hours trade at $439.49.

(Reporting by Alexei Oreskovic and Diane Bartz, with additional reporting by Edwin Chan, Megan Davies and Paritosh Bansal; editing by Leslie Gevirtz and Carol Bishopric)

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