Inside Google

Although the amended settlement agreement for Google’s Book Search addressed some concerns the U.S. Justice Department had, it still could give the company anticompetitive advantages in the digital book marketplace, the agency said on Thursday.

The Department of Justice advised the U.S. District Court for the Southern District of New York that "class certification, copyright, and antitrust issues remain" in a court filing.

The settlement  — reached between Google and the Authors Guild and Association of America Publishers — would allow Google to partially display in-copyright but out-of-print books alongside books authorized by publishers and public domain works in Google Books. It was weeks away from being approved by the court when the Justice Department intervened in September, citing a host of concerns.

The agency suggested that the agreement should impose limitations on the most open-ended provisions for future licensing so it would eliminate potential conflicts among authors and publishers, provide additional protections for unidentified rights holders, address concerns voiced by foreign authors and publishers, eliminate the joint-pricing mechanisms among publishers and authors, and provide a way for Google rivals to gain comparable access to the digital works.

The sides offered up an amended agreement in November, which still drew complaints from critics.

Now the Justice Department has weighed in again, concluding that the modified agreement still faces the same core problem as the original agreement did: "it is an attempt to use the class action mechanism to implement forward-looking business arrangements that go far beyond the dispute before the court in this litigation."

"The proposed amended settlement agreement eliminates certain open-ended provisions that would have allowed Google to engage in certain unspecified future uses, appoints a fiduciary to protect rights holders of unclaimed works, reduces the number of foreign works in the settlement class, and eliminates the most-favored nation provision that would have guaranteed Google optimal license terms into the future," the agency said.

However, the amended settlement agreement "still confers significant and possibly anticompetitive advantages on Google as a single entity, thereby enabling the company to be the only competitor in the digital marketplace with the rights to distribute and otherwise exploit a vast array of works in multiple formats," the agency added.

The agreement retains Google’s ability to sell full access to books in a variety of ways, which grants Google "sweeping control over the digital commercialization of millions and millions of books," the filing said.

The amended agreement gives Google defacto exclusivity to rights to the digital books because the company has a huge lead over competing efforts at Amazon and the Internet Archive, who in order to catch up would have to scan books without permission from rights holders, as Google has been doing, the agency said in its filing.

The exclusive access to the books that Google will get is likely to benefit Google’s existing online search business and further entrench its dominance in that market, according to the filing.

Meanwhile, by requiring that rights holders opt out of the program, the amended agreement seeks what would be an exception to normal rules under the Copyright Act that rights holders must affirmatively grant permission for uses of their work, the document said.

If an opt-out provision is maintained, the court should require a waiting period before Google can commercially exploit out-of-print works without getting rights holder permission, such as two years from the time the book is publicly listed in the online registry to be created under the agreement, the filing suggests.

The Justice Department said it is still committed to working with Google and the Authors Guild on the settlement agreement, particularly to "develop solutions through which copyright holders could allow for digital use of their works by Google and others, whether through legislative or market-based activities."

The agency said it believes that a "properly structured" agreement could provide "important societal benefits."

A Google spokesperson provided this comment: "The Department of Justice’s filing recognizes the progress made with the revised settlement, and it once again reinforces the value the agreement can provide in unlocking access to millions of books in the U.S. We look forward to Judge Chin’s review of the statement of interest from the Department and the comments from the many supporters who have filed submissions with the court in the last months. If approved by the court, the settlement will significantly expand online access to works through Google Books, while giving authors and publishers new ways to distribute their works."

The nonprofit advocacy group Consumer Watchdog praised the Justice Department’s stance.

"The settlement still abuses the class-action mechanism and purports to enroll absent class members automatically into new business ‘opportunities,’ in violation of current copyright laws," Consumer Watchdog reiterated from its friend-of-the-court brief opposing the agreement as modified. "This scheme acts to the disadvantage of absent class members and would result in unfair competitive advantages to Google in the search engine, electronic book sales, and other markets, to the detriment of the public interest. Along the way, the settlement raises significant international law and privacy concerns."

Updated 6:30 p.m. PST with more details from the DOJ filing and 6:07 p.m. PST with Google comment and 5:22 p.m. PST with Consumer Watchdog comment.