Posted by: Rob Hof on April 28, 2009
The Justice Department is looking into whether a 2008 settlement between Google and authors and publishers over the search giant’s Book Search service could be anticompetitive.
Reports in the New York Times and the Wall Street Journal say Justice lawyers have talked with Google as well as critics of the deal, which settled a 2005 lawsuit filed by the Authors Guild and the Association of American Publishers. The suit charged that Google’s scanning of copyrighted books in various libraries with the intention of letting readers search through millions of books violated copyrights.
The settlement would give Google the right to show the books online and profit from subscriptions to libraries and other institutions and from charging for access to individual books. Google agreed to pay $125 million to create a Book Rights Registry that would compensate authors and publishers from the proceeds.
Although Google won’t comment on the probe, I’ve confirmed with sources close to the matter that the company has had conversations with Justice on the deal in the past few weeks. More are planned in coming weeks. One source says the talks specifically concern so-called orphan works, or out-of-print books to which no one has claimed a copyright, not the copyrighted books that rest of the settlement concerns. The settlement gives only Google the right to profit from digitization of those orphan works without the threat of copyright lawsuits.
Justice also has talked with Google critics, such as the Internet Archive. That organization, which has also been scanning books for online access, said Google and the book registry would have sole control over access to the digitized orphan works. Peter Brantley, the group’s director of access, told me that Justice in recent weeks asked him a broad set of questions ranging from the characteristics of the electronic-book market and how scholars access books online to pricing of library access subscriptions and whether there are substitutes for Google’s proposed archive.
In a separate development, Judge Denny Chin of the Federal District Court in New York imposed a four-month delay on the May 5 deadline for authors to opt out of the settlement. Chin is expected to spend up to a month deciding whether the settlement should go forward. Other author groups had complained that the May deadline didn’t give them enough time to study the deal. (My colleague and author Spencer Ante, for one, wants to look it over more closely, though he’s inclined to accept it.)
Justice hasn’t commented yet, so it’s not known whether the discussions constitute a formal investigation. It’s customary, however, for the department to inform the subject of a formal probe first. Google has not been so notified.
Also, an investigation doesn’t necessarily mean Justice will oppose the settlement, regardless of what the judge’s decision on it turns out to be next fall. Among the possibilities are that, if the judge approves it, Justice might essentially warn Google and its partners that it will be watching carefully for signs of anticompetitive behavior. Or it could file suit anyway.
Controversy over the book search deal flared up after a recent article in the New York Review of Books by Harvard professor Robert Darnton that charged the deal would result in a monopoly in access to information. That view was disputed in a response by Paul Courant, dean of libraries at the University of Michigan, which is a partner in Google Book Search, and others, who called Darnton’s stance a “dystopian fantasy.”
Google argues that it has structured the deal so that it’s not exclusive to the company—that is, other groups could choose to scan books as well. The company also says it would make millions of out-of-print books accessible again. (My colleague Steve Wildstrom noted recently that no other company has stepped up to do this scanning—even Microsoft dropped its own book scanning project—so the argument that this settlement stifles competition seems iffy.)
This is the second set of antitrust inquiries involving Google. Last summer, the company abandoned a proposed search advertising deal with rival Yahoo after Justice threatened to file an antitrust lawsuit.