Mixed reviews for Google’s book settlement in final flurry of briefs from critics, supporters

Legal arguments pan, praise Google’s book deal

SAN FRANCISCO — Microsoft Corp., Yahoo Inc. and a prominent antitrust lawyer urged a federal judge Tuesday to block a class-action settlement that would give Google Inc. the digital rights to a vast library of books.

As that coalition warned of a literary cartel that would lead to higher prices and less competition, Sony Electronics, a technology trade group and economics professors came to Google’s defense by depicting the book deal as a breakthrough that would make millions of hard-to-find books available to anyone on the Internet.

Tuesday’s legal sparring came on the deadline for written arguments about a $125 million settlement that would entrust Google with a digital database containing millions of copyright-protected books, including titles no longer being published.

But at least one more key document is expected before U.S. District Judge Denny Chin holds an Oct. 7 hearing in New York to review the settlement. The Justice Department has until Sept. 18 to file its brief, which may provide some inkling on whether antitrust regulators have determined if the deal would hurt competition.

The settlement, reached last October, has raised the specter of Google becoming even more powerful than it already has become as the owner of the Internet’s most popular search engine and most lucrative advertising network.

Those concerns represented the crux of a 32-page brief written by Silicon Valley attorney Gary Reback, who helped the Justice Department pursue an antitrust case against Microsoft’s bundling of personal computer software in the 1990s.

Reback filed the brief Tuesday on behalf of the Open Book Alliance, which includes Microsoft, Yahoo, Internet bookseller Amazon.com Inc., other companies and nonprofit organizations. Microsoft and Yahoo, which compete with Google in search, also filed separate arguments; Amazon submitted its protest last week.

The alliance contends Google conspired with the author and publishing groups that sued the Mountain View-based company to make it more difficult for competitors to create similar indexes of digital books. The alliance contends that competitive barriers would empower Google, authors and publishers to the raise prices of digital books well above the current standard of about $10 per volume.

“The publishing industry desperately wants to raise the retail price point for digital books,” Reback wrote for the alliance. “The book settlement permits them to achieve that by working with Google.”

Google would give 63 percent of its digital book sales to the participating authors and publishers. The settlement covers books under U.S. copyright through Jan. 5, 2009, unless the copyright owners decline to join the agreement.

To preserve competition, Reback argued that Google should be required to license the digital book database to several rivals under the Justice Department’s supervision.

Backers of the book deal — including 32 professors specializing in antitrust and economics law — contend the antitrust concerns are unfounded.

The Computer Communications Industry Association, a trade association critical of Microsoft during its antitrust case in the 1990s, argued that Google’s nonexclusive agreement won’t prevent other merchants from selling electronic books — if they can spend an estimated $100 million to enter the e-book market.

If anything, lawyers for Sony Corp.’s electronics division argued, the increased supply of books available through Google’s digital library would foster more innovation and lower prices for electronic readers, including Sony’s own.

As more people buy readers, more companies would have an incentive to sell digital books, Sony reasoned, noting that DVD players that once cost more than $1,000 now sell for as little as $50.

The misgivings about Google’s settlement extend beyond its potential effects on the digital book market.

Microsoft and Yahoo, in particular, are worried that Google’s expanded index of digital books would cause even more people to use its search engine, which already fields nearly two-thirds of U.S. search requests.

Getting more data about users’ preferences could help Google further improve its search engine and make competing even tougher for Microsoft and Yahoo, the companies warned. Redmond, Wash.-based Microsoft and Sunnyvale-based Yahoo recently agreed to a 10-year partnership partly to have a larger set of data to improve search.

Google also might gain insights into the books that people are reading, something that prompted to a group of authors and publisher represented by the American Civil Liberties Union and the Electronic Frontier Foundation to object to the settlement.

Hoping to ease privacy concerns, Google is drawing up a separate policy governing the information it gets from book searches and sales.

Google also has made a series of concessions to address concerns by the settlement’s critics in Europe. Among other things, the company is adding two foreign representatives to the board overseeing its digital book rights. The governments of both Germany and France have filed objections to the U.S. book settlement.