The counterargument to your counterargument is that google could start taking over what they cannibalize and make more money directly.

Exactly, it's simple economics: If Orbitz et al. get $5 per Airline ticket sold, they can only afford to pay Google up to $4.99 for the click.

Google can take the $5 from the Airlines and laugh all the way to the bank.

The issue is that in order to do that google would have to only list flights from airlines that are willing to pay them $5.

If the airline refuses to pay and google doesn't display their flights then their results are incomplete.

The airlines will probably understand that google wants to be able to list their flights and will negotiate harder because of it.

This is a dangerous game however; the flip-side is that the airline has more potential profit to lose by not having google to sell their flights for them.

> If your startup is involved with search aimed at the consumer market, watch out...Google is coming.

Possibly... However sites like hipmunk will be used as a comparison in so many press articles and blog posts when google starts pushing this.

Many start ups have won against google. Google Notepad & Evernote, Google Wave & Twitter, Google Ride Finder & Uber etc...

.. but I still wouldn't want to be in this space right now.

Not entirely sure how you're equating Google Wave and Twitter.

I think Jaiku is the more apt comparison, for what it's worth.

Those are all ancillary to google's core product: search.

The problem with Google is that they don't seem interested in doing the hard work to go from 90% of the way there to a full product. It's like that with nearly everything they do. Often, it shows up as a US-only policy (flight search currently fits that bill). Other times, it's just random things. There are no Apps accounts for Google+. There's no "Tablet Optimized" section of the Android Market outside the US (and of course no books or movies either, but that's not their fault necessarily).

Most people aren't going to be interested in replacing something that works with something that sometimes works. Google might have a great flight search engine, but if I have to use Orbitz 30% of the time, I'll just use Orbitz. I already have an account set up there, and I can actually buy the ticket instead of having to find the flight, go to the airline web site, and search the flight again to buy it.

From playing around a bit, it seems like Kayak still has Google Flights beat on pricing by as much as 150 dollars. A quick comparison of a bunch of flights and I found that Kayak almost always had the lower price. I'm gonna have to agree with you on the 90% thing, I don't really see why Google would release something like this and not take pricing into consideration. I guess that will be fixed soon though.