Press Release

Justice Probes Antitrust Issues In Google Deal With Publishers


Fri, Jul 3, 2009 at 10:46 am

    The U.S. Justice Department said it is investigating a settlement between Google Inc. and authors and publishers, saying that antitrust issues raised by the deal warrant scrutiny by the agency.

    Deputy Assistant Attorney General William Cavanaugh disclosed the
    investigation in a letter to U.S. District Court Judge Denny Chin, who
    is scheduled to review the settlement. Mr. Cavanaugh wrote that the
    Justice Department hasn’t yet reached any conclusions on "what impact
    this settlement may have on competition."

    [Justices Probe Google Deal]
    Getty Images

    Google said it remains confident in its settlement with authors and publishers.

    Chin said the court will maintain an October hearing date and invited
    regulators to present views in writing by Sept. 18 or to appear in
    person during the hearing.

    Google spokesman Gabriel Stricker on Thursday reiterated the
    company’s previous statement that it had been contacted by the DOJ and
    several state attorneys general about the settlement and said it
    remains confident in the settlement.

    "It’s important to note that this agreement is nonexclusive and if
    approved by the court stands to expand access to millions of books in
    the U.S."

    Samuel Miller, an antitrust lawyer at Sidley Austin LLP who isn’t
    involved in the case, said the Justice Department’s move "makes it
    public and clear to the court that there may be some competitive issues
    with this settlement." He added that the move is likely to "make the
    judge take a harder look at the settlement."

    The agreement, which was struck to resolve a copyright lawsuit
    between Google, authors and publishers, gives Google copyright licenses
    over millions of digital books it has scanned since 2004 to include in
    its book search service and to sell in digital form to consumers and
    libraries. In exchange, it has agreed to share revenue earned by
    selling access to digital copies and advertising against books with
    rights holders.

    Since it was announced last October, however, the court has received
    letters raising concerns about the settlement, including worries that
    the settlement would prevent other companies from entering the digital
    book market. In particular, academics and competitors have written that
    the settlement could give Google de facto exclusivity over online
    access to works whose rights holders are unknown.

    Some large libraries have raised concerns about how Google will
    price a subscription digital books services it plans to offer if the
    settlement passes. Inc. chief executive Jeff Bezos
    said at a conference in New York in June that the company had "strong
    opinions" about the settlement and believed it "needs to be revisited."

    Some lawyers Thursday said the Justice Department’s move was simply
    procedural. "This is a nonevent," said David Balto, a senior fellow at
    the Center for American Progress and the former policy director of the
    Federal Trade Commission. "They simply want to inform the court."

    It is possible that there will be some adjustments to the
    settlement, said Allan Adler, vice president for legal and government
    affairs for the Association of American Publishers, one member of the
    team of lawyers and publisher representatives involved in the talks.
    But Mr. Adler said that he is confident the settlement will survive.

    "This letter is a status report to the court," he said. "They
    haven’t reached any conclusions, but they aren’t finished with their
    inquiry. But it will survive. There is tremendous public benefit
    involved, both for consumers and for institutions such as universities
    and libraries."

    Paul Aiken, executive director of the Authors Guild, also predicted
    the settlement would "pass muster" because it opens up new markets. But
    those concerned about the settlement said they were pleased with the
    Justice Department’s letter. "This is now a clear step that they are
    taking the matter seriously." said John M. Simpson, an advocate for
    Consumer Watchdog, a non-profit consumer group.

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