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April 18, 2008

Microsoft buys Farecast for an estimated $115M

Posted by David Hunter at 8:15 AM ET.

Late yesterday, it was revealed that Microsoft has acquired Seattle airfare prediction service Farecast for an estimated $115 million in another apparent technology/personnel buy. So what’s an airfare prediction service? Mark Hendrickson explains at TechCrunch:

Farecast is an airfare pricing comparison tool that also uses a predictive algorithm to recommend when you buy your ticket. So the idea is to show the user not just who has the cheapest ticket, but whether or not waiting might make sense as well. The site has also guarantees tickets at its predicted prices for an extra charge. As of this past fall, it also began helping travelers determine the fairness of hotel pricing.

Microsoft had signed a deal last July for Farecast to provide their service on MSN Travel so presumably there’s a track record to justify the acquisition price.

Update: A commenter at John Cook’s Venture Blog (first link above) makes an important point:

Also, since Yahoo owns FareChase (about the same size as FareCast) and MSN will almost certainly end up with Yahoo, why do they need two travel meta-search sites. Seems like a waste of $115M for MSFT.

Without trying to compare the FareChase and Farecast technologies, there’s a fine line as to what you do or don’t do pending an acquisition that may never be realized, but it does seem that this one could have been delayed a while.

Filed under Acquisitions, Coopetition, MSN, Microsoft, Yahoo

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