DOJ Launches Formal Investigation into Google Book Search Settlement

The U.S. Justice Department July 2 said it is formally investigating the $125 million settlement between Google and authors and publishers that lets the search engine scan books online and grant access to them for a fee.

Deputy Assistant Attorney General William Cavanaugh said in a letter to U.S. District Court Judge Denny Chin the government is responding to concerns the agreement violates the Sherman Antitrust Act.

“At this preliminary stage, the United States has reached no conclusions as to the merit of those concerns or more broadly what impact this settlement may have on competition,” Cavanaugh wrote in the letter. “However, we have determined that the issues raised by the proposed settlement warrant further inquiry.”

Chin is expected to review the settlement and said he will hold a fairness hearing Oct. 7, 2009. He invited the DOJ to present its views in writing by Sept. 18, 2009, and may appear at the hearing in person to present its views.

Google and the Authors Guild raised eyebrows last October when they announced their settlement of a class-action lawsuit, which the Authors Guild and the Association of American Publishers filed against Google in 2005.

Authors and publishers filed the suit because they were concerned Google’s Book Search bid to scan millions of books from libraries and offer them online would violate their copyrights. In the settlement, Google agreed to pay authors and publishers $125 million for the right to scan and offer the books online to individuals and libraries for money. Google also agreed to share sales from Google Book Search with authors and publishers.

Libraries, consumer rights advocates and other parties expressed concern such a deal would grant Google too much power in the online book realm, particularly over “orphan works,” or those books that are out of print and whose authors or rights holders are unknown.

Amazon CEO Jeff Bezos last month expressed his disdain for the deal; Amazon licenses digital book content from publishers to offer through its Kindle electronic-reading gadget.

More broadly, antitrust experts claim the move is another sign of Google’s growing power on the Internet, but no other companies are currently promising to tackle the task of organizing the world’s books online. Microsoft pulled the plug on its own book scanning effort in 2008.

Google appears unfazed by the DOJ inquiry. Google spokesman Gabriel Stricker acknowledged to several news outlets that while it had been contacted by the DOJ and state attorneys general about the settlement, it remains confident in the agreement.

Some experts view the move as a mere formality, noting that it is just a move to have the matter heard in a court. Consumer rights advocates take a more sanguine view of the DOJ’s scrutiny.

“The fact that the Justice Department decided to formally notify the judge in the Google Book Search class action settlement that it is investigating the deal is an important development,” consumer advocate for Consumer Watchdog John Simpson said in an e-mail to eWEEK.

“It demonstrates that the Justice Department is taking antitrust concerns raised by Consumer Watchdog, and others, very seriously.”