Google Books' Latest Foe: The Justice Dept.

The U.S. Justice Dept. joins a growing roster of opponents of Google's digital-publishing plan in its current form, fearing it concentrates too much power in too few hands

By Douglas MacMillan

As the attorney who spearheaded antitrust battles against Microsoft (MSFT) in the 1990s, Gary Reback shouldn't have been surprised earlier this year when execs at the software giant wouldn't return his calls. "It took me a while to get them to respond," Reback says.

This time around, though, Reback was calling as an ally, not a combatant. He needed Microsoft's help in hemming in what he sees as a new threat to competition. Google (GOOG) had won court approval for a plan that in Reback's view would give it too much sway over the burgeoning digital book business, and Reback wanted Microsoft to join him in trying to get the decision reversed. Microsoft eventually returned the call but still needed convincing that Reback was on its side, Reback says. So Reback offered to take half his normal fee. With that, Microsoft was in.

A few months on, the list of Google foes is growing. Besides Microsoft, Amazon (AMZN) and Yahoo! (YHOO) have also thrown their weight behind the Open Book Alliance, the group formed by Reback and Peter Brantley, director of the Internet Archive, a nonprofit Web-based information depository. And on Sep. 18 the U.S. Justice Dept. joined the chorus of critics, urging the court to shoot down Google's proposal in its current form.

"forward-looking business arrangements"

The object of all this ire is the October 2008 attempt by Google to settle a class action filed three years earlier by the Authors Guild and five major book publishers. The plaintiffs alleged that Google's practice of scanning out-of-print library books and making them available online infringed publishers' copyrights. To resolve the lawsuit, Google said it would pay $125 million to copyright holders. As part of the settlement, Google would also set up an online book registry that would let it keep scanning books and give publishers a cut of revenue generated from book sales or ads placed alongside e-books.

"The breadth of the proposed settlement—especially the forward-looking business arrangements it seeks to create—raises significant legal concerns," the Justice Dept. wrote to the New York District Court that on Oct. 7 will decide the fate of Google's proposal. "This court should reject the proposed settlement in its current form and encourage the parties to continue negotiations to modify it so as to comply with [civil law] and the copyright and antitrust laws."

The filing echoes fears voiced by Reback and the other parties the attorney has helped rally to the cause. Amazon, maker of the popular Kindle e-book reader, wants to avoid losing share in the nascent electronic-books market. Microsoft frets that Google will gain an unfair advantage in online advertising by having a massive, searchable library of books associated with its search engine.

The American Society of Journalists & Authors, also a member of the Open Book Alliance, says it wants to prevent large publishers, several of whom side with Google, from gaining too much control over prices. "Google is not building a library, it is building a bookstore," says Siva Vaidhyanathan, associate professor of media studies and law at the University of Virginia. "If this effort succeeds, it will be the dominant outlet for the sale of most of the books of the 20th century," adds Vaidhyanathan, who is finishing work on a book titled The Googlization of Everything: How One Company is Disrupting Culture, Commerce, and Community—And Why We Should Worry.

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