June 11 – 18, 2009 Edition

Justice Department May Block Google Book Settlement

WASHINGTON, D.C. (AUTHORLINK NEWS, JUNE 11, 2009—The Justice Department  may move to block or force a renegotiation of the much-publicized Google book settlement, which is still pending final approval in court, according to a June 10 article in The Wall Street Journal.

The antitrust division of the Justice Department is investigating Google’s deal with the Authors’ Guild and Association of American Publishers to charge users for copyrighted book content. But in April, the Justice Department moved in to investigate possible violation of antitrust laws, and is now  making “civil investigative demands, or CIDs” for publishers and Google to produce wide-ranging documentation related to the deal, The Journal said.

Last year, the Authors Guild and AAP sued Google for illegal scanning and sale of copyrighted books. Google subsequently agreed to pay $125 million to set up a fund to pay off the plaintiff’s lawyers and established a Book Rights Registry—also initially funded by Google–to collect and distribute money from book sales to authors and publishers and to handle disputes–for an additional cost to the rights holders of up to 20% in Registry fees.        

Critics of the Google settlement say  the deal will hand Google broad copyright immunity and make it difficult for competitors to enter the market for digital titles. Google, the Authors Guild and a few major publishing companies, however, portray the agreement is a landmark case that will expand digital access to books.

The Justice Department investigation is seen as a broader push by the Obama administration to scrutinize the technology industry.

For most of this year, Google brass have been traveling in the U.S. and Europe to persuade lawmakers and regulators that its dominance of Internet search and related businesses poses no competitive threat. Google executives and engineers are also meeting this week with tech industry experts and the media in San Francisco to explain “all the things we do to promote competition,” a company spokesman said.

The Journal said, “Google handles about two-thirds of U.S. Web searches and captures roughly a third of the money spent on Internet advertising in the U.S. It’s rapid growth has drawn fire from rivals and scrutiny from regulators. Last year, Google’s proposal to form a search partnership with rival Yahoo Inc. was blocked by Bush antitrust regulators.”

The book deal is just one avenue being pursued by the Justice Department’s new antitrust team, led by Christine Varney, a former Hogan & Hartson LLP. Ms. Varney said before taking her post that “antitrust laws may need to be interpreted in new ways to regulate technology companies, which grow to dominance faster than many traditional, industrial companies.”

See the full Wall Street Journal article by Elizabeth Williamson, Jeffrey A. Trachtenberg and Jessica E. Vascellaro.