The Global Antitrust Battle Over Google's Library; Time, 10/31/09

Theo Emery, Time; The Global Antitrust Battle Over Google's Library:

"Who knew there was so much fight in those dusty books? When Google announced plans in 2004 to scan millions of tomes tucked into library stacks across the country, admirers embraced the ambitious project as a digital undertaking as visionary as Magellan's setting sail around the world. The project would throw open musty archives everywhere, putting hidden works on the Internet for all to use.

How things change. The library project is now embroiled in a ferocious legal free-for-all spanning the globe. At the battle's heart is Google's year-old settlement with groups representing authors and publishers who sued the company over its plans to digitize and copy books. In response to complaints by the settlement's many opponents, a federal judge in New York has asked Google to revise the settlement by Nov. 9. After that, opponents and the Department of Justice (DOJ) will carefully scrutinize the new deal.

The case presents a tangle of issues: how to create new markets for old books without shortchanging authors; how to nurture new technology without stifling competition; and how to preserve all that when one company — in this case, Google — is pioneering the revolution and could profit handsomely. One commentator, who supports the original settlement, has called it "the World Series of antitrust."...

Pamela Samuelson, a faculty director of the Berkeley Center for Law & Technology who has raised concerns about the deal, called it an "extremely significant case" for the future of digital publishing. "The logic of the agreement, I think, is going to put Google in a very privileged position in the digital book market."

The original settlement appeared to be a fait accompli until last summer, when a sleepy copyright case, Authors Guild et al. vs. Google Inc., erupted into an intercontinental brawl. Hundreds of authors and publishers from the Netherlands to New Zealand have written to U.S. District Court Judge Denny Chin, some expressing astonishment and outrage. France and Germany have protested; German Chancellor Angela Merkel singled out Google for criticism in a podcast this month.

Authors are on both sides of the barricades. Opponents of the settlement include silver-maned folk singer Arlo Guthrie and former Deputy Assistant Attorney General John Yoo, author of the so-called torture memos for President George W. Bush. The settlement counts The Joy Luck Club author Amy Tan and noir crime novelist Elmore Leonard among its supporters. The deal has many other supporters as well, from disability rights groups to Dr. Seuss Enterprises and the National Grange.

Fueled by writers, the debate has plenty of rhetorical flourishes. One incensed objector called Google a "Dickensian street pickpocket." The Open Book Alliance, a coalition that includes goliath rival Microsoft as well as the National Writers Union, likened Google to industrialist John D. Rockefeller and compared the settlement to a monopoly cartel controlling the future of digital publishing. "They have worked very hard to create the impression that this is like a freight train, and if you want to stand in front of it, you'll get run over," Gary Reback, an antitrust attorney who penned the legal brief for the Open Book Alliance, told TIME.

Last month the DOJ dropped perhaps the biggest bombshell. While saying that the settlement could breathe life into millions of unavailable works, the government also said the deal raised "significant legal concerns," and was the target of an antitrust probe...

What to make of it all? With e-books poised to take off, the case raises thorny questions. Will the deal benefit the public along with authors and publishers, while providing only minimal profit to Google? Or will it chart the course for future digital publishing and nudge Google ahead of rivals in the infancy of an emerging and potentially lucrative business? It is suspense worthy of a legal thriller — and Scott Turow is among the settlement's supporters."

http://www.time.com/time/business/article/0,8599,1933055,00.html

Why is the Antitrust Division Investigating the Google Book Search Settlement?; Huffington Post, 8/19/09

Pamela Samuelson via Huffington Post; Why is the Antitrust Division Investigating the Google Book Search Settlement?:

"As I explained last Monday, the settlement is audacious because it uses the legal jujitsu of the class action procedure to give Google a breathtaking license to all in-copyright books. The agreement authorizes Google to create a digital library of these books and to commercialize most of them. Google will compensate rights holders for commercialization of these books either directly if they signed up with the Google partner program or indirectly through a newly created Book Rights Registry (BRR) whose job is to distribute money to rights holders signed up with BRR.

The U.S. Department of Justice (DOJ) Antitrust Division announced in late April 2009 that it was investigating whether the settlement agreement is, as some critics charge, an agreement that will unreasonably restrain trade or create a monopoly that would enable Google to extract monopoly rents from the books and further entrench Google's dominance in the search market.

Antitrust analysis generally starts with a definition of the affected market. The market for digital books is currently rather small, but it is growing. Many predict that it will become a major market in the future. Clearly, Amazon and Barnes & Noble, as well as Google, can negotiate with rights holders of in-print books to make these books available in digital form (although the settlement would give Google the right to scan the books first and negotiate later). Google argues that Amazon and other digital booksellers can also license rights to sell digital books from the BRR. And of course, anyone can sell or give away public domain books...

My concerns about the competition-policy consequences of the settlement center on the market for institutional subscriptions. The settlement gives Google the right to have and make available the contents of a universal library of books. Anyone else could build a digital library with public domain books and whatever other books it could license from publishers or BRR. But no one else can offer a comparably comprehensive institutional subscription service because only Google has a license to all out-of-print books. Google's optimistic estimate is that only 10 percent of the books in the corpus will really be "orphans," but 10 percent is still roughly two million books. Suppose the real percentage of orphans is closer to 30 percent and another 20 percent of those whom BRR tries to sign up tell the BRR reps to get lost...

Under the Bush Administration, the DOJ would likely have done nothing about the GBS settlement. But the Obama Administration takes antitrust seriously. We will know very soon what DOJ plans to do, for the judge presiding over the settlement agreement has asked DOJ to report on its antitrust analysis by September 18."

http://www.huffingtonpost.com/pamela-samuelson/why-is-the-antitrust-divi_b_258997.html