US still unsure about Google digital book deal

The US government still believes a proposal to give Google the digital rights to millions of hard-to-find books threatens to stifle competition and undermine copyright laws, it emerged today.

The US Justice Department’s opinion, filed in New York federal court, is a significant setback in Google’s effort to win approval of a 15-month-old legal settlement that would put the internet search leader in charge of a vast electronic library and store.

The justice department opinion comes despite a series of revisions to the proposal.

A diverse mix of Google rivals, consumer watchdogs, academic experts, literary agents, state governments and even foreign governments have already urged US District Judge Denny Chin to reject the agreement.

In its 26-page brief, the department praised the revised settlement for making “substantial progress”, but the government advised the judge that the agreement still overstepped the legal boundaries of a class-action settlement, describing its manipulation of US copyright law as a “bridge too far”.

The justice department also raised concerns that Google’s partnership with the participating US publishers could turn into a literary cartel that would wield too much power over book prices.

Despite its misgivings, the department has urged the parties to make another effort at making changes that would eliminate its legal concerns.

Google spokesman Gabriel Stricker gave no indication whether the company and other settling parties were willing to amend the agreement again.

“The Department of Justice’s filing recognises 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 US,” he said.

Judge Chin has scheduled a February 18 hearing to consider approving the class-action settlement.

Consumer Watchdog, one of the groups fighting the settlement, praised the justice department for taking a stand against a deal “that unfairly benefits the narrow agenda of one company”.

But a former policy director for the Federal Trade Commission predicted Judge Chin would approve the settlement.

“The DOJ’s view is clouded by taking a microscopic and static view of an incredibly dynamic marketplace,” said David Balto, now a senior fellow at the Centre for American Progress think-tank.

The government’s anti-monopoly concerns extend beyond the settlement’s potential for driving up book prices.

Yesterday’s filings also pointed out that the deal could make Google’s search engine even more dominant by giving it a digital database of books built up largely by ignoring copyright laws.

“Content that can be discovered by only one search engine offers that search engine some protection from competition,” the justice department wrote.

“This outcome has not been achieved by a technological advance in search or by operation of normal market forces; rather, it is the direct product of scanning millions of books without the copyright holders’ consent.”

Google already processes about two thirds of the search requests in the US, an advantage that led the company to rake in 79 billion dollars (£49.4bn) in revenue during the past five years – mostly from short ads posted alongside search results and other web content.

That success has emboldened Google to make digital copies of more than 12 million books during the past five years. It has shown only snippets from most of them while trying to revolve a class-action lawsuit filed in 2005 by groups representing US authors and publishers.

The suit claimed Google’s book-scanning project trampled on their intellectual rights.

A $125m (€91m) truce reached in October 2008 has remained on hold while Google tried to notify the affected parties and overcome staunch resistance to the deal.

Some of the most strident opponents have been Google rivals, including Microsoft, Amazon.com and Yahoo.

But the agreement also has prominent supporters, including college libraries, publishing groups and Sony, which wants to tap into Google’s digital book index to feed its own electronic reader, which is competing against Amazon.com’s Kindle.