Google's PR Campaign

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Copyright Immunity

Similarly, Google's effort to digitize books has triggered litigation. The proposed settlement would give Google control of a huge volume of so-called orphan books, for which the copyright holder isn't known. The Justice Dept. is concerned because Google alone gets immunity from copyright claims involving those works. Without such protection, no other company will compete with Google to commercially exploit this content, says Peter Brantley, a director at the Internet Archive, a San Francisco nonprofit that has its own book copying program.

In addition to commercializing the books themselves, Brantley notes, Google will be able to extract vast quantities of information through data mining and use it to develop other products. One possibility is an online encyclopedia that could compete with Wikipedia. Brantley's concern reflects a common fear that Google can leverage its monopoly position in one area to create new businesses. He and others say they have spoken to Justice Dept. antitrust attorneys about the proposed settlement and would like the government to oppose it. Wagner responds that Google's book-copying enterprise will produce big benefits for consumers, and he argues that anyone else who wants to do the same is free to strike their own legal deal on copyright. The proposed settlement has yet to be approved by the court, and the Justice Dept. declined to comment.

Wagner is right. Amazon.com (AMZN), Yahoo, or any other large rival is perfectly free to initiate its own book negotiations—although the hurdles are so high that hardly anyone expects them to do so. And for most other criticisms, Google has well-honed replies at the ready. Is the company too powerful on the Web? Well, as Google points out, that's one place where competition is always "just a click away." What about the monopoly in search? Google's dominance is overstated, Wagner claims. Many outfits that look at search traffic tend to focus on dedicated search engines. Wagner says they ignore the countless searches carried out every day on commercial sites such as Amazon, eBay (EBAY), Wikipedia, or iTunes (AAPL).

Still, Google is finding that nearly everything it does is now being scrutinized through the lens of competition. For example, a number of companies in the U.S. and Europe have objected to Google's policy of allowing advertisers to buy a competitor's brand name as a keyword. They claim this is a trademark violation, which Google denies. David Wood, a Brussels-based antitrust attorney, says Google can do this only because of its commanding market share. In effect, according to Wood, Google is telling brand owners how someone else can use their trademark. "It's just extraordinary," he says. Google's ability to do this could be regarded as abuse of its dominant market position, says Wood, who serves as counsel to European media trade group ICOMP (Initiative for a Competitive Online Marketplace), which objects to the practice. ICOMP was founded by, and is funded by, Microsoft, a chief Google rival.

More Scrutiny Is Inevitable

Even the trove of data Google collects on those who use its search, e-mail, and other products can become an antitrust issue. As Google's market share grows, privacy advocates say, would-be rivals who might compete by keeping users' personal data more secure are pushed out of the picture. It was on this basis two years ago, when the Federal Trade Commission reviewed Google's acquisition of Internet ad agency DoubleClick, that FTC Commissioner Pamela Jones Harbor said privacy concerns should be part of an antitrust analysis.

While the FTC approved the DoubleClick deal, it drew far more regulatory attention than Google had expected—leading to the new outreach campaign. "We know that as we grow to a certain size, it's just inevitable that we're going to get more questions from regulators, we're going to have more scrutiny," says spokesman Adam Kovacevich. "Some of that, of course, is fed by competitors, but we know we have to have good answers to these questions."

Orey covers corporations for BusinessWeek.

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