Google Inc has announced plans to acquire Cambridge-based ITA software in a $700 million deal. Google said last Thursday it had agreed to buy privately owned software, in a move that, according to Google, would allow the search engine leader to improve the way consumers find flight and fare information online.

ITA Software is a 500-employee company created by computer scientists at the Massachusetts Institute of Technology in 1996. It sells technology that helps run the reservation systems of many airlines, such as American, Southwest and Continental. Its software also powers the tools that other travel websites use to track airfares. The Google buy-out thus challenges flight-comparison services that are ITA customers, including Kayak, Hotwire and Microsoft’s Bing Travel. “There is clearly more room for competition and innovation in online travel,” said Google CEO Eric Shmidt. “We will improve the way flight information is organized.”

Google’s controversial move is likely to be reviewed by federal antitrust regulators. Although the company claims this deal is “pro-competitive” and “pro-consumer”, a rigorous review from U.S. regulators is expected before anything can be written in stone. The widespread reliance on ITA’s services will most likely make federal investigations time consuming, as determining whether Google has an unfair advantage over other companies might take up to a year.

It is therefore 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. However, Schmidt claims Google has no plans to sell airline tickets directly to consumers.

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