Both Google and opponents of the deal expressed enthusiasm for the settlement proposal, which now must be approved by the judge hearing the DOJ's complaint.
The DOJ said the deal Google originally proposed would reduce competition among flight comparison websites and would reduce choice and harm innovation.
For Google, which saw its proposed book scanning settlement shot down last month, the DOJ's deal represents a significant win, even as a compromise.
"[W]e're excited that the U.S. Department of Justice today approved our acquisition," said Jeff Huber, SVP of Google's commerce and local group, in a blog post.
Nonetheless, the limitations on Google that come with the deal were welcomed by FairSearch.org, a group backed by Microsoft and a number of travel websites.
"Today's decision by the Justice Department to challenge Google's acquisition of ITA Software is a clear win for consumers," FairSearch.org said in a statement. "The Department concluded Google's unrestricted control over ITA's key flight search technology would have violated the antitrust laws."
FairSearch.org's opposition to Google extends beyond the travel industry to the company's book scanning project and its search market power.
In a conference call hosted by FairSearch.org on Friday, Tom Barnett, counsel to Expedia and former head of DOJ's antitrust division, conceded that the DOJ did not address the group's objection to Google's search might. "[The settlement] does not address this broader issue of Google misusing its general search dominance . . . so that remains an open question," he said.
Barnett characterized the settlement as a first step and suggested further DOJ scrutiny of Google could be forthcoming.
As a condition of the deal, Google must continue to license ITA's QPX software for airfare websites on "fair, reasonable, and non-discriminatory terms" through 2016. And it must commit to continued investment in ITA's QPX software and in ITA's unreleased InstaSearch product, which aims to provide near instant airline fare quotes.
In addition, Google must establish internal procedures to segregate data collected from ITA's business clients and must use it only as specified in the settlement. Furthermore, Google may not enter agreements with airlines that limit their right to share seat and booking class data with Google's competitors.
The settlement also establishes a formal mechanism for handling potential complaints about Google's behavior.
According to Huber, ITA's software will allow Google users to "type 'flights to somewhere sunny for under $500 in May' into Google and get not just a set of links but also flight times, fares, and a link to sites where you can actually buy tickets quickly and easily."